Despite contributing more than a third of Kenya's GDP, local micro and small businesses still face credit access problems. With the new risk-sharing facility, I&M Bank Kenya will finance SMEs that it categorizes as too risky.

The Dutch development finance institution, FMO, announced on Monday, July 18, a local-currency-denominated US$15 million portfolio guarantee for the Kenyan commercial bank, I&M Bank Kenya.

Thanks to the risk-sharing facility, I&M Bank Kenya will boost its corporate financing offers. Apart from capital, it will also provide digital solutions to local SMEs. “The guarantee from FMO will help our (M)SME clients accelerate their business growth and support their expansion efforts, while providing support to those clients negatively impacted by COVID-19,” explained Kihara Maina (photo), CEO of I&M Bank Kenya.

The Kenyan bank is the FMO’s partner since 2010. The portfolio guarantee it signed is a NASIRA portfolio guarantee deployed to enable local banks to provide loans to businesses that are deemed too risky. To achieve that goal,  I&M Bank Kenya integrated a solution on its online platform, allowing its clients access to unsecured loans ranging from Kshs50,000 to Kshs 3 million. Those loans are repayable over a period of up to three years.

In its Q1- 2022 results, released May 24, I&M Group PLC (parent group of I&M Bank Kenya) indicated that its loan portfolio had risen 13 percent to Ksh218.4 billion (US$1.84 billion), as of March 31, 2022. It did not disclose its Kenyan subsidiary's share in that portfolio. Despite contributing more than one-third of Kenya's GDP, micro, small and medium enterprises still face credit access challenges. 

Chamberline MOKO