Credit Bank has received a Ksh. 824 million (US$8 million) capital injection from the African Development Bank (AfDB) that will be used to finance small and medium-sized enterprises (SMEs) in the country’s construction, agriculture, renewable energy and manufacturing sectors.
According to a news report by the Business Daily, the AfDB loan interest rate is yet to be announced but the loan has a five-year maturity with a two-year grace period.
“The board of directors of the African Development Bank Group approved a $8 million (about Sh824 million) targeted financing to Kenya’s Credit Bank for lending exclusively to small and medium enterprises,” the financier said in a statement according to the Business Daily.
AfDB similarly vouched for Credit Bank’s ability to adequately finance SMEs following the inking of the deal between the two lenders which will in turn help the country achieve socioeconomic goals such as enhancing entrepreneurship, creating jobs and maintaining sustainable growth.
“As such, it is well-positioned to succeed in providing innovative longer-term financial solutions to SMEs along several value chains including strategical financial solutions in Kenya,” Stefan Nalletanby, AfDB Director for Financial Sector Development, said in a statement.
AfDB’s latest investment is in line with the bank’s strategy to increase funding approvals for Kenyan projects. According to the firm’s latest annual report, the institution has increased funding approvals for Kenyan projects by 37.7 per cent to Ksh. 48.2 billion up from Ksh. 35 billion in 2017.
The move by Credit Bank adds on to a growing trend in the country that has seen lenders acquire substantial loans from global funds such as IFC and European Investment Bank. Banks are drawn to these funds because they offer better loan terms such as lower single digit interest rates and longer maturity periods.
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