The European Investment Bank, Europe’s long-term lending institution has agreed to provide a Euro 7 million facility to K-Rep Bank Ltd for onward lending to its micro and small enterprise customers in Kenyan Shillings and at competitive interest rates. The agreements were signed in Nairobi earlier today.
The funding has been provided from the European Investment Bank’s East African Microfinance Facility and each final beneficiary could qualify for up to 50% financing for their business investment needs, with K-Rep Bank providing the balance. This enables K-Rep to enhance its lending capacity by leveraging on the European Investment Bank funding. The loan will be available for maturities of up to 5 years.
“Creation of new jobs and economic growth in Kenya is driven by improved access to long-term finance by small and medium sized business. The European Investment Bank looks forward to working closely with K-Rep Bank to reinforce entrepreneurial investment over the coming years and build on a strong track record of supporting the private sector across East Africa.” said Plutarchos Sakellaris, European Investment Bank Vice President.
“K-Rep Bank offers a full spectrum of financial products targeting the microfinance sector, retail business and SME’s. Some of the products offered by K-Rep bank include micro and SME loans, trade finance and other working capital facilities to a broad range of economic sectors spanning across agro-industry, fishing, construction, food processing, transport, trade and retail services. K-Rep views enterprises in these segments as crucial pillars to enabling Kenya achieve its ‘Vision 2030’ and hence the decision to partner with the European Investment Bank to avail funding for continued support to these enterprises, thus enhancing economic growth and job creation in the country”, said Albert Ruturi, K-Rep Bank Managing Director.
The Agreement was signed by Kurt Simonsen, Head of the EIB’s Regional office and Albert Ruturi, K-Rep Bank Managing Director at the K-Rep Bank’s Kilimani Centre Headquarters. The new loan will facilitate customer lending from as low as kshs 50,000, thus ensuring a wider reach and ensuring that the bank remains true to its core objective of financial inclusion for even the smallest micro and retail customer. The EIB Loan facility will help K-Rep Bank to provide medium term loans to these clients, a task that would otherwise be challenging given that the traditional funding sources from customer deposits in this segment are largely short term in nature.
In addition to the Loan, the EIB will fund technical assistance to be provided to the final beneficiaries with the aim to support them in preparing business plans, developing their activities and improving knowledge and efficiency of their operations. Part of technical assistance funding will be used to address specific requirements of the partner institutions.
The funding co-operation with the EIB, a major development financing institution further affirms K-Rep Banks’ continued ability to partner with leading local and international financiers to extend funding to the microfinance and SME customers, who are crucial players in driving Kenya’s economic growth.
The European Investment Bank has been lending to small businesses In Kenya since 1991 and provided more than EUR 280m (KShs 30 billion). The additional EUR 7 million signed today with K-Rep Bank (another KShs 760 million) further strengthens European Investment Bank’s partnership with local financial institutions. The European Investment Bank is committed to supporting SMEs and micro enterprises in the East African region through the East African Microfinance and Private Enterprise Finance Facilities funded by the Bank. Further funding co-operation in East Africa with other banks and microfinance institutions is foreseen later this year.
K-Rep Bank, the oldest microfinance institution in Kenya was founded in the early 80’s with the core objective of enhancing capacity building and financial inclusion through microfinance lending to the lowest segments of the Kenyan economy. The bank has grown over the years, in tandem with the growth of its initial microfinance programme beneficiaries, to become a fully-fledged commercial bank.