Equity Bank is the biggest beneficiary of the Sh111.7 billion investments in 31 Kenyan firms by the International Finance Corporation, having received nearly 40 percent of the global financier’s portfolio in the country.
A disclosure by the World Bank Group - the parent of International Finance Corporation (IFC)—shows that Equity had received Sh42 billion from IFC by April last year, with a bulk of the investment being quasi-equity, a hybrid form of finance with characteristics of both debt and equity investments.
Banks were the largest beneficiaries of financing from the IFC, the private investment arm of the World Bank Group that focuses on the private sector in emerging markets.
With an outstanding balance of Sh15 billion, Co-operative Bank was a distant second in a list that also featured firms in agribusiness, energy, real estate, insurance and manufacturing.
KCB Kenya received Sh13.9 billion from the global financier to boost its capital buffers, DTB Kenya (Sh6.7 billion), and I&M (Sh6.2 billion).
The disclosure, contained in the World Bank Group’s Country Partnership Framework (CPF) for the Period FY23-FY28, shows that close to 77.5 per cent of IFC’s total investment in Kenya by June last year, or Sh86.6 billion, was dominated by banks.
IFC has become the biggest lender to local banks that in turn use the funds to boost their capital and expand lending including categories prioritised by the global financier such as climate-friendly projects and women-owned businesses.
For the local banks, these IFC loans help to augment their capital for onward lending to small businesses, with a significant amount coming in when the Covid-19 pandemic hit Kenya in March 2020.
“IFC investments cut across the financial, manufacturing, agribusiness and services, and infrastructure sectors. It maintains a rich advisory services program covering renewable energy, trade and competitiveness, public-private partnerships, access to finance, and corporate governance,” said the World Bank in the CPF.
Other huge beneficiaries of IFC’s financing, whose sole objective is to help emerging countries transition into market economies, include National Cement (Sh4.6 billion) and Britam Holdings (Sh3.4 billion).
Canadian-based oil and company, Africa Oil Corp, has also received Sh3.4 billion in equity from IFC. Small lender GTB Kenya received Sh1.8 billion.
Agri-tech firms Twiga Foods and Thika Power have each received Sh1.4 billion while Bidco Africa Limited has received Sh1.3 billion.
IFC’s activities in Kenya intensified following the outbreak of Covid-19 and is likely to go beyond the Sh111.7 billion if you include pending commitments and recent announcements such as buying a Sh19.2 billion stake in Safaricom Ethiopia, a subsidiary of Safaricom, a telecommunications company.
Most of the capital investments have been quasi-equity at $330.96 million (Sh40.8 billion), followed by loans totalling $264.16 million (Sh32.5 billion) and equity at $189.3 million (Sh23.3 billion).
Cumulatively, IFC’s investment in Kenyan firms rose to $4.1 billion (Sh505 billion) in the year ended June 2022, according to disclosure in its latest annual report.
This was an increase from $3.6 billion (Sh443.5 billion) the year before.
The total number of companies that received the support of IFC, including those which have since exited, rose to 143 last year, up from 138 a year earlier.
IFC will be part of the World Bank Group family that is expected to mobilise funds for Kenya totalling $2.5 billion (Sh306.6 billion) for the completion of various private-public partnership (PPP) projects in the period between 2023 and 2027.
The World Bank will inject part of this war chest into transport and energy projects, inputs and technology services, food processing as well as logistics and supply chains.
One of the PPP projects that the World Bank is expected to help finance is the Nairobi-Nakuru-Mau toll road with IFC expected to inject either debt or equity into the 233-kilometre highway.
Some of IFC’s recent activities in Kenya are the purchase of a 6.7 percent stake in Equity Group for Sh14 billion. The institutional investor also sold its minority stake in supermarket operator Naivas Limited after more than doubling its two-year investment of $15 million (Sh1.8 billion).
Equity Group accounted for the largest share of these loans at Sh38.9 billion, which it took for its Kenyan and Democratic Republic of the Congo subsidiaries by the end of last year.
