The European Investment Bank (EIB) is providing Fina Bank and other selected financial intermediaries with a EUR 20 million line of credit under its Kenya Private Enterprise Finance Facility. The support, which is in the form of long-term funding available both in forex and Shillings, will assist Fina Bank’s expansion of its business lending in the small and medium sized enterprises (SME) market.
Fina Bank was one of the first banks to have a specific SME focus in Kenya and therefore plays an important role in developing this important segment of the country’s economy. Fina’s focus on the SME marketplace is in line with the EIB’s support for SME development which it carries out through the lines of credit it provides to selected intermediaries throughout the Africa, Pacific and Caribbean region (ACP).
The credit line is aimed at financing medium-sized investments in the agro-industry, fishing, mining, food processing, manufacturing and tourism sectors as well as education and healthcare. The aim of the funding is to assist enterprises with their expansion, diversification or modernisation projects through long term loans. With a maximum lifetime of 10 years, the loans will be available to draw in Shillings, US Dollars or Euros at either floating or fixed rates.
Frank Griffiths, Fina’s Group Chief Executive Officer commented, “We are very pleased to be signing this agreement with the EIB which will allow us to provide longer term loans to our growing number of SME customers. Expanding a business is not easy and being able to finance a project for up to 10 years will be greatly appreciated by our customers.”
Mr Griffiths continued, “Our objective as a bank is to deliver appropriate financial products and services to meet the needs of SMEs. The ability to offer up to a 10 year loan, in a variety of currencies, and with the option of a fixed rate of interest, is relatively unique in the market.
“The EIB support will help us achieve our developmental goal of assisting new and existing small businesses to grow and prosper.”
Jared Aimba, Fina’s Head of Business Banking said, “We have a dedicated Business team to assist our clients on-site in completing the application package and to consult on the best structure for their financing needs. The agreement with EIB is for a limited amount so priority will be given to companies with expansion projects which can demonstrate a positive impact on the economy”
Carmelo Cocuzza, Head of the EIB’s Regional Representation in Nairobi, stated that “The availability of business loans with a maturity exceeding five years on the Kenyan market is limited. The EIB’s line of credit will help Fina Bank expand the offer of this product. The borrowers will benefit from longer tenors to fund their long term investments and from protection against interest rate volatility through the fixed interest rate option”.
This is the EIB’s first credit line to Fina Bank in the framework of the Cotonou Agreement, under which the EIB finances investment and provides long-term finance to the financial sector. Since 1991, the EIB has traditionally been a long-term funding partner to Kenya’s private sector SMEs through its well known Global Private Enterprise (GPE) schemes under which it provided a total of EUR 155m to fund Kenyan SMEs, particularly in agro-industry and floriculture.
Mr Griffiths concluded, “EIB is a leading development finance institution and we are proud to partner with them in Kenya. Their support will help us achieve our goal of contributing to the economic growth of Kenya through successfully banking SMEs.”
Note to the Editor
The European Investment Bank (EIB), established in 1958 by the Treaty of Rome, finances capital investment projects that further the European Union (EU) policy objectives. Outside the Union the EIB has been an active development partner in many African, Caribbean and Pacific (ACP) countries since 1963. EIB lending in these regions is an integral element of the European financial support package provided under the ACP-EU Cotonou Partnership Agreement of 2000.
The Bank’s operations in the ACPs contribute to sustainable social and economic development and poverty alleviation. As well as providing loans from EIB own resources, the Bank manages the Investment Facility (IF), a revolving fund financed by the EU Member States. The IF provides various forms of risk-sharing financing instruments for investment projects in most economic sectors. EIB loans to the ACP region in 2006 amounted to EUR 745 million.