EIB launches EUR 50m East Africa microfinance programme

Small and micro businesses across East Africa will benefit from the European Investment Bank’s new EAC Microfinance Facility, launched today. The initiative will encourage job creation and increase access to long-term funding for micro and small enterprises through experienced local intermediaries. Faulu Kenya DTM and Co-operative Bank Kenya joined the EUR 50 million scheme today as the first regional partners.

The East African Community Microfinance Facility, backed by the European Investment Bank, Europe’s long-term lending institution, allows experienced banks and microfinance institutions engaging in microfinance to receive local currency funding to support their financing of local business. Partner banks can also benefit from dedicated training and technical assistance to improve the effectiveness of this financial support to the private sector.

The East African Community Microfinance Facility was launched today in Nairobi by Group Managing Director, Co-operative Bank of Kenya, Dr. Gideon Muriuki, the Chairman, Board of Directors Faulu Kenya DTM Ltd, Mr. Ken Wathome and European Investment Bank Vice President Plutarchos Sakellaris, currently in Kenya on an official visit.

“The European Investment Bank recognises the strong demand for long-term funding from micro entrepreneurs and small business in East Africa. Working with experienced local partners will allow the East African Community Microfinance Facility to stimulate both the creation of new jobs and ensure funding is available for the missing middle. Starting today with two renowned partners in Kenya, I am confident that thousands of entrepreneurs across the region will benefit as the programme expands.” said Plutarchos Sakellaris, European Investment Bank Vice President.

“Co-operative Bank of Kenya has, since its inception, concentrated the bulk of its efforts on providing banking for the average Kenyan, either directly or through the Co-operative movement. This funding will go a long way towards entrenching the bank’s value proposition to this consumer segment”. said Dr. Gideon Muriuki, Group Managing Director Co-operative Bank of Kenya.

“Faulu Kenya is committed to providing holistic financial solutions to the economically active poor, micro and medium entrepreneurs through innovative products. This funding will greatly reduce the cost of credit to our customers and boost our efforts in outreach and building capacity in the Kenyan informal sector.” said Mr John Mwara, Managing Director, Faulu Kenya Deposit Taking Microfinance.

Co-operative Bank of Kenya customers in small and micro business will benefit from EUR 20 million in local currency the EIB has made available under the East African Community Microfinance Facility. Co-operative Bank, as one of the largest banks in Kenya, is well placed to support increased investment by small-scale private sector entrepreneurs across the country.

Faulu Kenya DTM will use EUR 4 million in local currency from the programme to support self-employed and entrepreneur owned micro and small businesses in Kenya. They became the first Kenyan licensed deposit taking microfinance institution regulated by the central bank in 2009 and are one of the largest microfinance institutions in the country.

Kenyan entrepreneurs will also benefit from technical assistance to support preparation of business plans, developing activities, improve management skills and increase operational efficiency. This is expected to improve the credit worthiness of financial beneficiaries. Where appropriate, partner banks will also receive specialist training to address credit risk management and product development.

The East African Community Microfinance Facility will be the first of three regional microfinance programmes that the European Investment Bank plans to launch in sub-Saharan Africa over the next three years. This will expand direct lending by the European Investment Bank to microfinance institutions.  In East Africa this will target both those countries with a developed microfinance market, such as Kenya and Uganda, as well as countries with growing microfinance activities, such as Tanzania and Rwanda. A new lending programme to support small business lending in Kenya is also being launched today by the European Investment Bank.