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IFC and FMO, the Dutch entrepreneurial development bank, have announced a loan of US$50mn to I&M Bank Ltd to help smaller businesses across different sectors in Kenya access financial support for expansion and economic recovery
With IFC contributing US$30mn and FMO contributing US$20mn, the loan will strengthen I&M Bank Ltd's regulatory capital position, allowing the bank to boost economic activity in Kenya, by lending to small and medium-sized enterprises in the trade, manufacturing and construction sectors.
As part of their support, IFC and FMO will train I&M Bank staff on green financing, so the bank can better support green investments, including renewable energy and climate-smart agriculture.
"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."
The financing facility from IFC and FMO will support I&M Bank Ltd's strategic initiatives, including in business banking solutions, ranging from trade and debt finance to business transaction services.
"IFC's partnership with I&M Bank Ltd will help the bank support small and medium-sized enterprises in the country, many of which are struggling amid COVID-19 disruptions. IFC has prioritised reinforcing capitalisation of the banking system to enhance the sectors' resilience as part of its response to the pandemic," said Amena Arif, IFC country manager for Kenya.
"We are pleased to continue our support to our long-standing client, I&M Bank Ltd. As a well-reputed top-tier bank in Kenya focusing on supporting local MSMEs, this project aligns with FMO's strategy of reducing inequalities and enhancing financial support in the COVID-19 recovery period," said Marnix Monsfort, director, Financial Institutions, FMO.
COVID-19 has disrupted Kenya's economic activity, forcing many businesses to close, and heightening the need for capital for others to continue operations. Small businesses in Kenya employ more than 80% of the working population.
In May, IFC announced a US$2bn commitment to support smaller businesses, increase trade across Africa, boost the continent's economic recovery and business activities, and sustain and create jobs.Since March 2020, IFC has provided loans worth US$395mn to Kenyan companies, across financial, manufacturing, agribusiness, services, and infrastructure sectors.