AfDB approves US$75mn financial package to complement Diamond Trust Bank’s funding to small and medium sized enterprises in East Africa
The African Development Bank has approved a US$75mn financial package comprising US$50mn line of credit (loc) and US$25mn subordinated debt to Diamond Trust Bank Kenya Limited. The funding is aimed at supporting small and medium sizes enterprises and emerging corporates in East Africa.
The loc will provide financing to small and medium enterprises and local corporates involved in value-addition in the trading, manufacturing, transport, and construction. Thus, the loc will enhance job creation and will help facilitate financial access to businesses. The sub-debt will bolster Diamond Trust Bank’s balance sheet by enhancing its Tier-II capital, enhancing the banks expansion aims.
East Africa is one of the most diverse regions, economically, on the continent. Small and medium sized enterprises are vital to the expansion of the region’s economy as they possess great potential for output diversification, development of indigenous entrepreneurship, employment generation, and forward integration with large-scale industries. However there has been a gross under-performance of these enterprises, which has undermined their contribution to economic growth. Various issues undermine their performance of which shortage of finance, particularly long-term funding, is the most daunting challenge. Diamond Trust Bank is an important financier of small and medium sized enterprises and local corporates in East Africa.
This intervention by the African Development Bank will contribute to Diamond Trust Bank’s efforts to broaden access to financing by businesses in Kenya and also facilitate expansion into other markets in the region. The funding will also contribute to Diamond Trust Bank’s endeavours to complement the efforts of various partners and players working towards supporting the economic transformation of East Africa’s economy to make it more resilient and diversified.
