Companies
Co-op Bank taps Sh14bn loan for lending to small businesses
Friday July 14 2023
Co-op Bank’s chief executive Gideon Muriuki. FILE PHOTO | NMG
Co-operative Bank of Kenya has received a $100 million (Sh14.14 billion) long-term loan from a consortium of financial institutions led by DEG for onward lending to micro, small and medium-sized enterprises (MSMEs) in Kenya.
The lender said Friday it got the seven-year tier II facility where DEG, a Germany-headquartered development finance institution and a subsidiary of KfW Group, acted as the lender, mandated lead arranger and facility agent.
Other financiers in the consortium included the Africa Agriculture & Trade Investment Fund, Micro Small Medium Enterprises Bonds and European development finance institutions namely Finnfund, Norfund and the co-financing facility European Financing Partners.
“The funding by DEG and the consortium is most timely in view of the great need to better support our business customers,” said Gideon Muriuki, managing director at Co-operative Bank Group.
The lender said the long-term tenure of the facility has significantly boosted its ability to offer solutions that are better structured to fulfil the long-term financing needs of MSMEs.
The DEG-led facility comes at a time the bank is deepening its digitisation strategy with the recent transition to a new $50 million (Sh7.07 billion) core banking system.
“By acting as lead arranger and providing the subordinated loan to Co-op Bank, DEG contributes to the further development of Kenya’s financial sector and the wider economy through the creation of jobs and local income,” said Monika Beck, a board member at DEG.
The DEG funding marks the latest round of long-term financing that Co-op Bank has been tapping from global partners to enhance opportunities for growth and overall performance.
Co-op closed December with long-term borrowings valued at Sh48.1 billion compared with Sh42.9 billion at the end of the previous year.
Outstanding long-term borrowing from International Finance Corporation stood at Sh15.55 billion, followed by Sh6.9 billion from European Investment Bank East Africa, Sh1.16 billion from AFD Microfinance and Sh467.45 million from Kenya Mortgage Refinance Company.
Co-op’s subsidiary, Kingdom Bank, also tapped a Sh24 billion interest-free loan from the Central Bank of Kenya.
Read: SMEs access Sh4.6bn State-backed loans
The Nairobi Securities Exchange-listed firm reported a 4.7 percent jump in the net profit to Sh6.1 billion in the first quarter ended March, on the back of a growth in interest income from loans.
