(Ecofin Agency) - The United States development financial institution IFC together with FMO, the Dutch entrepreneurial development bank, today announced a loan of $50 million to I&M Bank Ltd. Of the total amount invested, IFC is committing $30 million while FMO provides $20 million.
The financial services company will use the money to strengthen its regulatory capital position, which will in turn boost the economic activity in Kenya by lending to small and medium-sized enterprises in the trade, manufacturing and construction sectors.
"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," he added.
The second SMEs Conference & Expo 2021 hosted by the Nation Media Group, in partnership with the Kenya National Chamber of commerce and Industry (KNCCI), outlined numerous challenges Small and Medium-sized Businesses face in Kenya. Prominent among these challenges is the lack of credit access and the inefficiencies of agencies mandated to unlock the potential of SMEs.
According to KNCCI, small and medium-sized enterprises represent about 98% of all businesses, and over 80% of Kenya´s working population depend on them for income.Yet, the gaps in accessing credit continue to be a huge problem for the sector. However, in attempts to reduce the gaps, government, banks, and development partners have recently started initiatives to create credit guarantee schemes to support lending to small businesses.