IFC and FMO, the Dutch entrepreneurial development bank, have announced a $50 million loan facility to the I&M Bank to support SMEs in Kenya. The loan will help smaller businesses across a range of sectors in the country access financing for working capital, expansion, and weather the effects of COVID-19.
With IFC contributing $30 million and FMO contributing $20 million, the loan will strengthen I&M Bank’s regulatory capital position, allowing the bank to boost economic activity in Kenya by lending to small and medium-sized enterprises mainly in the trade, manufacturing and construction sectors.
As part of their support, IFC and FMO will train I&M Bank staff on green financing so the bank can better support green investments, including renewable energy and climate-smart agriculture.
“The funding line from IFC and FMO is most welcome and will enable I&M Bank Ltd to provide cash flow support to small businesses whose operations have been affected by COVID-19 measures and the pandemic in general,” said Kihara Maina, CEO, I&M Bank Ltd Kenya. “We believe that this funding line will help our MSME customers accelerate their business growth and support their expansion efforts while cushioning them from the ramifications of the COVID-19 pandemic.”
The financing facility from IFC and FMO will support I&M Bank’s strategic initiatives, including in business banking solutions ranging from trade and debt finance to business transaction services.
“IFC’s partnership with I&M Bank will help the bank support small and medium-sized enterprises in the country, many of which are struggling amid COVID-19 disruptions. IFC has prioritized reinforcing capitalization of the banking system to enhance the sectors’ resilience as part of its response to the pandemic,” said Amena Arif, IFC Country Manager for Kenya.
“We are pleased to continue our support to our long-standing client, I&M Bank as a well-reputed top-tier bank in Kenya focusing on supporting local MSMEs, this project aligns with FMO’s strategy of reducing inequalities and enhancing financial support in the COVID-19 recovery period,” said Marnix Monsfort, Director Financial Institutions, FMO.
COVID-19 has hit Kenya’s economy hard, disrupting economic activity, forcing many businesses to close, and heightening the need for capital for others to continue operations. Small businesses in Kenya employ more than 80 percent of the working population.
In May, IFC announced a $2 billion commitment to support smaller businesses, increase trade across Africa to galvanize the continent’s economic recovery from the pandemic and sustain and create jobs and business activities.
IFC’s committed investment portfolio in Kenya is predominantly in the financial, manufacturing, agribusiness, services, and infrastructure sectors. Since March 2020, IFC has provided loans worth $395 million to Kenyan companies, including this loan to the I&M Bank.