The International Finance Corporation (IFC) loan will enable Kenya’s eighth largest lender by assets to continue giving credit to small traders and companies.
mall-sized businesses have been hardest hit by the economic effects and uncertainty of the pandemic, weakening their ability to save and tap loans.
Diamond Trust Bank Kenya has become the second top-tier lender in less than a month to secure Sh5.41 billion ($50 million) from the World Bank Group’s private sector arm for onward lending to small and medium-sized businesses which have been hardest hit by economic woes as a result of the Covid-19 pandemic.
The International Finance Corporation (IFC) loan will enable Kenya’s eighth largest lender by assets to continue giving credit to small traders and companies, largely perceived to be risky by lenders because of inadequate collateral for loans.
Small-sized businesses have been hardest hit by the economic effects and uncertainty of the pandemic, weakening their ability to save and tap loans.
“This facility will enable us to support SMEs to address their cash flow challenges, which is a key concern as businesses need easy access to short-term liquidity,” DTB Group chief executive Nasim Devji said in a statement on Tuesday.
“We urge our SME borrowers to take advantage of the facility to ensure their survival during these tough times, as we remain committed to their development.”
The cash is part of the IFC’s global $8 billion (Sh864.88 billion) Covid-19 facility, launched in March to support businesses with working and trade-related capital and protect jobs at a time countries are grappling with depressed economic activity as a result of the restrictions to stem the spread of the pandemic.
Central Bank of Kenya (CBK) governor Patrick Njoroge, quoting a survey he said was commissioned by Industrialisation and Trade ministry, noted late May that three quarters of small businesses were facing serious cash flow challenges as a result of Covid-19 economic shocks.
“IFC’s partnership with DTB Kenya is part of our strategy to help businesses in Kenya manage the impacts of COVID-19 so they can continue providing essential goods and services and maintain jobs,” IFC chief for Kenya Manuel Moses said in the statement.
“IFC is committed to helping countries across Africa meet the unique challenges of COVID-19 and also speed the process of
recovery.”
The deal was inked barely a month after Equity Group, Kenya’s second largest lender by market share, got similar amount for the same purpose.
Treasury secretary Ukur Yatani has allocated for Sh3 billion as seed capital to operationalise a credit guarantee scheme for micro, small and medium-sized enterprises.
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