Co-op Bank taps Sh14bn from DEG group for MSME lending
The DEG-led Consortium and Co-op Bank teams after sign-off of the $100 Million financing agreement. (From left) Wilfred Apunda - Senior Investment Manager DEG, Michael Fischer - Director Financial Institutions Africa at DEG, Caroline Karimi – Director Finance & Strategy Co-op Bank, Monika Beck - Member of DEG’s Management Board, Dr Gideon Muriuki - Group Managing Director & CEO Co-op Bank, Judy Kinyanjui – Investment Director Norfund and Antje Steiner – Regional Director East Africa at KfW DEG. Partly hidden at the back are William Nyaoke – Regional Director East Africa, Norfund and Sam Kibugi - Company Secretary Co-op Bank. PHOTO | POOL
Co-operative Bank of Kenya has received a $100 million (Sh14.14 billion) long-term loan from a consortium of financial institutions led by DEG for on-lending to micro, small and medium-sized enterprises (MSMEs) in Kenya.
The lender said Friday it has fully received the seven-year tier II facility where DEG, a Germany-headquartered development finance institution and a subsidiary of KfW, acted as the lender, mandated lead arranger and facility agent.
Other financiers in the consortium include the Africa Agriculture & Trade Investment Fund, Micro Small Medium Enterprises Bonds and European Development Finance Institutions namely Finnfund, Norfund and the co-financing facility European Financing Partners.
“The funding by DEG and the consortium is most timely in view of the great need to better support our business customers,” said Gideon Muriuki, the managing director at Co-operative Bank Group.
The lender said the long-term tenure of the facility has significantly boosted its ability to offer solutions that are better structured to fulfil the long-term financing needs of MSMEs.
The DEG-led facility comes at a time the bank is deepening its digitisation strategy with the recent transition to a new $50 million (Sh7.07 billion) core banking system.
“By acting as lead arranger and providing the subordinated loan to Co-op Bank, DEG contributes to the further development of Kenya’s financial sector and the wider economy through the creation of jobs and local income,” said Monika Beck, a board member at DEG.
The DEG funding marks the latest round of long-term financing that Co-op Bank has been tapping from global partners to enhance opportunities for growth and overall performance.
Co-op closed December with long-term borrowings valued at Sh48.1 billion compared to Sh42.9 billion at the end of the previous year.
Outstanding long-term borrowing from International Finance Corporation stood at Sh15.55 billion followed by Sh6.9 billion from European Investment Bank East Africa, Sh1.16 billion from AFD Microfinance and Sh467.45 million from Kenya Mortgage Refinance Company.
Co-op’s subsidiary, Kingdom Bank, had also tapped a Sh20.9 billion interest-free loan from the Central Bank of Kenya.
The NSE-listed firm reported a 4.7 percent jump in the net profit to Sh6.1 billion in the first quarter that ended March, on the back of a growth in interest income from loans.
