Co-op Bank and IFC ink a US$1m lending advisory deal for SMEs

KENYA – The International Finance Corporation (IFC) is offering advisory services to Co-op Bank in a US$1 million (KSh100 million) deal aimed at enhancing the firm’s capacity in lending to small and medium-sized enterprises.

According to Business Daily, this marks the latest partnership between the Nairobi Securities Exchange-listed company and the global financier.

IFC has offered other technical advisory services to Co-op Bank besides providing it with long-term loans for onward lending to SMEs.

“This is a banking advisory services project with Co-operative Bank, designed to increase access to finance to the medium sized businesses through skills enhancement, processes and procedures review to enable the bank effectively serve the segment,” IFC said in its investment disclosures.

IFC added that the initiative builds on an earlier such partnership with the bank and which has been delivered. The latest project is expected to run until August 31, 2020. Co-op Bank’s lending to SMEs has increased since it started working with IFC in 2016.

Gross loans to this customer segment stood at US$25 million (KSh2.5 billion) in 2017, representing about one percent of the total loan book of US$2.68 billion (KSh268 billion).

The bank more than tripled the loans to SMEs in the subsequent year to US$92 million (KSh9.2 billion), committing 3.4 percent of its assets to this customer group.

“This project is designed to leverage and unlock the huge and lucrative potential of the MSME segment,” Co-op Bank said of the partnership.

In 2019, the Co-operative Bank of Kenya rolled out countrywide business sensitization campaign targeting Micro, Small and Medium Sized Enterprises (MSMEs) in the country.

According to a press statement from the bank, the initiative was aimed at empowering enterpreneurs with skills and strategies to survive business challenges and make profits. The first upcountry forum was held in Nakuru County coming a month later after another one in Nairobi.

The International Finance Corporation, a member of the World Bank Group, is an international financial institution that offers investment, advisory, and asset-management services to encourage private-sector development in less developed countries.

IFC consists of five closely associated institutions that are owned by member countries. Each plays a distinct role in helping fight poverty and improve lives. IFC promotes economic development through private sector.

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