Sidian Bank has secured Sh990 million funding from Dutch private equity firm Oikocredit for onward lending to small and medium enterprises (SMEs).
The facility, to be repaid in five years, will support the bank in its focus on providing credit to small-scale entrepreneurs.
“This is yet another footprint of the bank’s strategic initiative to be the preferred bank for trade finance solutions and SMEs, especially in view of the impact of the pandemic on SME businesses,” said Sidian chief executive officer Chege Thumbi on Wednesday.
The funds are part of the bank and Dutch PE firm’s efforts to boost funding of small businesses often facing obstacles in accessing credit.
“This investment will enable the bank to lend more and thus contribute to the creation of sustainable jobs, which is in line with the mission of Oikocredit to create lasting social impact on the low-income sections of the society,” said Oikocredit’s Investments Manager, East and Southern Africa Caroline Mulwa.
The partnership will support the growth of small businesses through the provision of guarantees for the bank’s customer loan facilities.
Lenders are tapping into risk-sharing models like SME guarantee from the government and development institutions to limit their risk exposures.
In July, Sidian also received Sh500 million from African Guarantee Fund (AGF) for SMEs lending.