AFDB APPROVES US$100M LINE OF CREDIT TO KENYA COMMERCIAL BANK, US$3M TO UNION TRUST BANK SIERRA LEONE

ABIDJAN, The African Development Bank (AfDB) approved a US$ 100 million Line of Credit (LoC) to Kenya Commercial Bank Limited (KCB) and US$ 3 million LoC to Union Trust Bank Sierra Leone (UTB).

The LoC to KCB will provide much-needed liquidity support for the development of infrastructure and energy projects as well as support value-addition in manufacturing and providing the youth. The project is therefore an important contribution towards enhancing job creation as well as facilitating financial access to businesses.

The LoC to UTB to help finance projects and enterprises in transformational sectors such as agriculture, energy, manufacturing and services, with strong emphasis on women-owned businesses.

Kenya’s economy is one of the most vibrant on the continent because of its diverse and resilient characteristics. The economy enjoys a unique feature whereby both the corporate segment and established SMEs drive economic growth.

The bank’s role is also critical in jobs creation, enhancing output diversification, developing indigenous entrepreneurship and forging trade ties within the region and globally. Availability of requisitely priced funds at matching tenors is therefore a key ingredient towards assisting these enterprises to thrive sustainably and eventually contribute towards economic development.

The LoC will bolster KCB’s ability to reach and serve deserving businesses in Kenya. Additionally, the AfDB will, through this LoC, contribute towards KCB’s efforts to broaden access to financing for Kenyan businesses thereby helping to develop the private sector.

This intervention is well aligned with AfDB’s Ten Year Strategy, 2013-2022, as well as one of the Bank’s High 5 Strategic priorities of improving the living conditions of Africans. KCB is currently the largest bank in Kenya in terms of assets, customer deposits as well as loans and advances portfolio. It offers a wide range of products and services to retail, corporate, institutional and SME clients.

The Bank is one of pioneers in alternative service channels including agency and mobile banking that promote financial inclusion. This has catapulted it to the position of market leader across several customer segments in Kenya.

Approving the LoC, AfDB Board members emphasized the need for KCB to take the womenfolk along in all its interventions in Kenya and neighboring countries.

Meanwhile, UTB is the only indigenous private bank in Sierra Leone and an important provider of finance for indigenous micro, small and medium- sized enterprises.

This facility also entails the provision of Technical Assistance support of US$ 320,000 and an additional US$ 300,000 from the Transition Support Facility to subsidize the cost of a synthetic swap associated with conversion of the proceeds of the facility into local currency for ease of lending to local businesses.

The facility is expected to deliver strong development outcomes by enhancing access to finance (under competitive terms and longer tenors than typically available in Sierra Leone) to SMEs, indigenous firms and women-owned enterprises in Sierra Leone as the country seeks to rebuild following the widespread damage caused by the Ebola Viral Disease epidemic and more recently, devastating mudslides which displaced thousands of people.

Most of the funding is expected to be channeled towards women and rural dwellers. The project will enhance private sector development, by demonstrating the viability of investing in growth oriented SMEs. Increased revenue by the beneficiaries at sub-project level will lead to incremental tax accrual to governments. The facility will also support financial inclusion, gender and social benefits as well as fiscal impacts.

This will be the first Line of Credit by the AfDB to UTB and demonstrates AfDB’s continued commitment to assist Regional Member Countries experiencing fragility.

Source: NAM NEWS NETWORK