Loans

IFC signs deal to insure Bank of Africa SME loans

IFC signs deal to insure Bank of Africa SME loans
Written by Publishing Team

money markets

The International Finance Corporation signs a deal to secure loans for small and medium-sized companies from the Bank of Africa


Hassan

Bank of Africa Kenya Managing Director Ronald Marambi. profile picture | NMG

charlesmwaniki_img

Abstract

  • The International Finance Corporation has signed a deal to provide Bank of Africa Kenya a cover against losses in loans to small and medium enterprises as the lender looks to increase its financing for small businesses.
  • The International Finance Corporation, the private sector lending arm of the World Bank, said the facility will cover 50 percent of losses on all eligible loans made by Bank of Africa Kenya.

The International Finance Corporation (IFC) has signed a deal to provide Bank of Africa Kenya a cover against loan losses for small and medium enterprises as the lender looks to increase its financing for small businesses.

The International Finance Corporation, the private sector lending arm of the World Bank, said the facility will cover 50 per cent of losses on all eligible loans made by Bank of Africa Kenya (BOA Kenya) to SMEs, up to a shilling equivalent of $5 million. (650 million shillings).

The agreement will also see the IFC provide the Tier 3 bank with advisory services on how to mitigate risks as it transitions to the defunct SME sector, which is considered one of the most risky sectors in the banking sector.

“The IFC Risk Mitigation product, along with the support of general and targeted advisory services, will help Bank of Canada in Kenya reduce risk and expand its lending to SMEs in its most challenging markets. It will also help us transition to a small business focused bank. and medium scale and has subsidiaries across Kenya,” said BOA Kenya Managing Director Ronald Marambi.

The secured loans will largely target women-led companies and those focused on tackling climate change.

Kenya’s Boa Bank, which at the end of 2020 held a 0.72 per cent market share in the Kenyan banking industry, held a loan book of Sh15m in September 2021, having shrunk from Shh17.23bn a year earlier.

It posted a profit after tax of Sh4.58 million in the nine months ended September 2021, reflecting a loss of Sh217.9 million in the corresponding period of 2020.

The IFC program is supported by the Global Small and Medium Enterprises Finance Facility (GSMEF), a partnership between the International Finance Corporation (IFC) and the UK’s Foreign and Commonwealth Office of Foreign Affairs and Development and the Dutch Ministry of Foreign Affairs.

The support also lends to the Women Entrepreneur Opportunities Facility (WEOF), a global financing facility dedicated to expanding access to capital for women entrepreneurs, launched in 2014 by the International Finance Corporation through its women’s banking program, Goldman Sachs 10,000 Women.

.

About the author

Publishing Team

Leave a Comment