The Co-operative Bank of Kenya has raised a sum of Sh12.6billion for onward lending to Micro Small and Medium Enterprises (MSMEs) aimed at strengthening the lender’s shore capital base.
Norwegian fund Norfund revealed that one of the institutions is playing a part in the financing with a direct credit line of Sh2billion, and another Sh430million through the European Financing Partners.
“The funds will strengthen the bank’s capital base, support lending to MSME and position the bank for future growth. Co-op is the third largest bank in Kenya, 65 per cent owned by local co-operatives and the largest co-operative bank in Africa,” Norfund stated.
In recent years, banks have taken considerable amount of loans from global funds such as the IFC, European Investment Bank (EIB) and Agence Francaise de Developpement (AFD), attracted by relatively more favourable terms of debts including lower interest rates and longer maturity.
Co-op Bank’s outstanding long-term borrowings from such institutions as IFC and AFD stood at an equivalent of Sh19.6billion by the end of 2021.
In its latest annual report, the lender said that most of these funds were used to provide credit in areas surrounding renewable energy, mortgages and agribusiness.
The World Bank Group’s private investment arm, IFC, is the leading long-term partner for local banks having committed a total of Sh111.7 billion to 31 Kenyan based lenders by April 2021.