The International Finance Corporation (IFC) is set to lend $15 million (kes1.6 billion) to Guaranty Trust Bank Kenya for onward lending to Small and Medium-sized Enterprises (SMEs). The loan is part of IFC’s funding of financial institutions in emerging markets under its COVID-19 crisis response programme.
“The proposed loan of $15 million…is a one-year loan, with the option to be rolled over for an additional year at IFC’s discretion. The loan will provide Guaranty Trust Bank Kenya with additional liquidity support for its operations amidst prevailing economic challenges. This project with Guaranty Trust Bank will avail working capital and trade-related loans to borrowers, predominantly SMEs, stabilising supply chains and re-enforcing resilience in critical sectors such as trade, fast-moving consumer goods, pharmaceuticals and manufacturing, that have been impacted by the pandemic. IFC said in its investment disclosures.
The loans are designed to be disbursed to companies whose cash flows have been disrupted by the pandemic, such as Guaranty Trust Bank Kenya helping to boost their working capital among other needs.
The International Finance Corporation defines SMEs using various measures including firms having between 10 and 300 employees or annual sales of between KSh11 million and KSh1.6 billion. The loan size per borrower usually ranges from Kes1.1 million to Kes 221 million. The loan will thus provide working capital and trade-related loans to borrowers, stabilising supply chains and re-enforcing resilience in critical sectors such as trade, fast-moving consumer goods, pharmaceuticals and manufacturing, that the pandemic has impacted.
In August, IFC partnered with FMO, a Dutch development bank, to assist small businesses in Kenya by providing funds for working capital, expansion, and weathering the COVID-19 crisis.
IFC contributed $30 million and FMO contributed $20 million to the I&M loan. The funds will boost I&M’s capital position and enable the bank to lend to small and medium-sized enterprises in the manufacturing, trade, and construction sectors.
According to the IFC website, the institution has provided loans worth more than $395 million to Kenyan companies since March 2020.