The African Development Bank (AfDB), a multilateral development finance institution, has partnered up with Credit Bank to help out small and medium-sized enterprises (SMEs) with credit.
The bank has agreed to issue Credit bank with credit worth Sh824 million ($8 million) to help out SMEs in industries such as agricultural, construction, renewable energy and manufacturing. The loan has a five-year maturity with a two-year grace period.
According to Stefan Nelletanby, the director of financial sector development of AfDB, the board of directors of the African Development Bank Group has approved Sh824 million targeted at financing Kenya’s Credit Bank for lending exclusively to small and medium enterprises in construction, agriculture, renewable energy, and manufacturing.
“The bank is well placed to lend to SMEs, which it has been providing with various credit facilities including loans, working capital and trade finance. As such, it is well-positioned to succeed in providing innovative longer-term financial solutions to SMEs along several value chains including strategical financial solutions in Kenya,” he said.
The African Development Bank’s decision to lend the money for loans was inspired by their need to help achieve socio-economic goals. The money, AfDB says, should help SMEs grow their businesses and, in the future, facilitate job creation, income generation, and sustainable growth.
This marks the latest investment by AfDB in Kenya. The multilateral institution raised its funding approvals for Kenya projects by 37.7% last year to Sh48.2 billion, according to its latest annual report. The lender, in which Nairobi has a 1.44% stake, had also committed a total of Sh35 billion for Kenya in 2017.
Credit Bank joins the list of local lenders that are increasingly taking substantial loans from global funds such as the IFC and European Investment Bank, attracted by relatively more favorable terms of the debt, including lower interest rate and longer maturity.