African Development Bank Approves $8M Loan to Credit Bank for SMEs

The African Development Bank Group board last Wednesday approved a $8m loan targetted financing to Kenya’s Credit Bank for lending exclusively to small and medium enterprises (SMEs).

The loan is set to mature with five years maturity with a two-year grace period. However, the interest rates was not discoled.

In a statement, AfDB said that the loans will be disbursed to Kenyan SMEs in construction, agriculture, renewable energy and manufacturing sectors.The loan will be used to finance businesses in construction, agriculture, renewable energy and manufacturing.

Credit Bank is a privately-owned commercial bank in Kenya. By end of 2018, the bank had a total assets of 17.81 billion Kenyan shillings ($173m dollars).

“It is financially sound and, as an adequately capitalized tier-3 financial institution, has a strong track record of SMEs, providing working capital and trade finance facilities. 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, Bank Group director for financial sector development, told the Board.

The objective of the facility is to provide access to finance to SMEs, the “missing middle” in Kenya, thereby reducing their financing gap.

The facility’s proceeds will support transactions aimed at improving their productive capacities thereby enhancing entrepreneurship, job creation, income generation, and sustainable growth, leading to a multiplier effect on the country’s economic growth, according to the Bank.

Credit Bank joins the list of local lenders that are taking substantial loans from global funds such as the International Finance Corporation (IFC) and European Investment Bank, attracted by relatively more favourable terms of the debt, including lower interest rate and longer maturity.