- Ms Vivienne Yeda, the director general of EADB, said the funds will be deployed to "promote enterprises that generate employment opportunities, social economic development and consequently promote regional integration."
- Kenyan and regional based banks have in recent years taken substantial loans for onward-lending from global funds.
The East African Development Bank has secured a Sh2.16 billion loan from the Opec Fund for International Development (OFID) for onward lending to small and medium sized enterprises (SMEs) in the region.
While announcing the long-term funding, whose interest rate was not disclosed, the Opec Fund said in a statement that the facility would uplift EADB's lending to the small enterprises in its key markets of Kenya, Uganda, Tanzania and Rwanda.
"We are pleased to support private sector development in East Africa, which goes to the core of our mandate,” said Opec Fund director-general Abdulhamid Alkhalifa.
Ms Vivienne Yeda, the director general of EADB, said the funds will be deployed to "promote enterprises that generate employment opportunities, social economic development and consequently promote regional integration."
Kenyan and regional based banks have in recent years taken substantial loans for onward-lending from global funds, including the International Finance Corporation (IFC), European Investment Bank (EIB), Agence Française de Développement (AFD) and the African Development Bank (AfDB), attracted by relatively more favourable terms of debts like lower interest rates and longer maturity tenors.
Co-operative Bank #ticker:COOP , KCB #ticker:KCB and Equity #ticker:EQTY are among the lenders that have borrowed from international financiers to fund their long-term lending business.
Lenders have previously complained of a mismatch between long-term loans and customer deposits that are mostly short- term, exposing a gap that they have chosen to fill with credit from international institutions that charge single-digit interest rates.
This mismatch has also led many lenders to shun away from issuing long term credit on facilities such as mortgages.
International borrowing has also gained ground after the local corporate bond market was shaken by the collapse of former Chase Bank and Imperial Bank, which owe bondholders nearly Sh10 billion, excluding interest.