The Co-operative Bank has secured $25 million (Sh3.4billion) from DEG of Germany for onward lending to women-owned Small and Medium Enterprises, in the latest move to support growth of businesses.
DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH is a subsidiary of KfW Group.
Co-op Bank has earmarked to use these funds to set up a credit line intended exclusively for micro, small and medium-sized enterprises (MSMEs) that are managed or owned by women.
This financing is the first to be made by DEG in which a guarantee from the European Fund for Sustainable Development Plus (EFSD+) is used to secure part of the loan.
EFSD+ was established as part of the EU’s Global Gateway Initiative to boost cooperation with the private sector and to enable projects particularly relevant in terms of development policy.
The credit line will help to close existing gaps in funding for MSMEs on the local credit market in Kenya, where interest rates remain high.
Growth in commercial bank lending to the private sector also dropped to 10.3 per cent in February compared to 13.8 per cent in January 2024, latest Central Bank of Kenya data shows.
“The Co-op Bank is a long-standing customer of DEG. The current investment is an important contribution to supporting SMEs in developing countries in general and SMEs run by women especially.” Monika Beck, member of DEG management board said.
All the funds are earmarked to go to female entrepreneurs, Beck affirmed.
“The EU guarantee is helping to realise this investment which is particularly relevant in view of its development impact, thereby creating jobs and raising household income locally.” Beck added.
The Co-operative Bank Group Chief Executive Officer (CEO) and Managing Director Gideon Muriuki said the financing from DEG comes at the right time, since there is a great need for stronger backing of businesses that are owned or managed by women.
“Furthermore, the facility will boost the bank’s capacity to cover the long-term funding requirements of SMEs.” Muriuki said.
DEG has partnered with Co-op Bank since 2013.
The current transaction contributes to the UN Sustainable Development Goals (SDGs), notably SDG 8 ‘Decent work and economic growth’ and SDG 5 ‘Reduced inequalities’ as well as to the EU’s Global Gateway Initiative.
Co-op is among lenders that have been keen on supporting growth of SMEs in the country.
Last year, it set aside a Sh14.1billion war chest for affordable loans to small businesses.
