ACP INCLUSIVE GROWTH & YOUTH EMPLOYMENT -KCB KEN

The project consists in a credit facility to enhance access to finance for micro, small and medium-sized Enterprises (MSMEs) and mid-caps, which play an important economic role in driving growth and creating employment, contributing to over 90% of the workforce. The sector is however facing constraints in accessing finance, in particular young people, which are the vital driving force of inclusive economic growth and sustainable development in Kenya.

The aim is to enhance access to finance to the target beneficiaries via KCB's targeted financial products and support a conducive environment for private sector investments, which are vital to create jobs and income opportunities. The operation will support the private sector inclusive growth, decent job creation for young people and youth entrepreneurship across the country.

The project aims to widen access to financial services for SMEs, support youth employment and empowerment throughout Kenya and contribute to the economic growth as well as poverty reduction in the country. Through the extension of a long-term credit facility to KCB Bank Kenya, the project will enable improved financing conditions and conducive environment for SMEs and creation of income and employment opportunities for youth in particular.

In Kenya, while overall access to finance is robust, SMEs remain underserved by the financial sector. Perceived higher risk and inability to risk price the SMEs during the interest rate cap regime created barriers for the growth of this segment over the recent years. The EIB financing aims to address this financing gap and support a leading Kenyan bank with its strategy to increase its lending to SMEs and support youth.

EIB financing is expected to be particularly additional by providing a long-term credit line in hard currency to KCB Bank Kenya, especially considering the ongoing foreign currency liquidity constraints in Kenya. The bank will benefit from improved maturity and diversification of its overall funding base which is otherwise funded mainly by short-term customer deposits. EIB facility will also have a strong signalling effect towards international lenders during market downturn and economic uncertainties.

The project aligns with the strategic priorities of Kenya and the EU by addressing relevant market failures and complementing the overarching objectives such as inclusive growth, affordable finance, employment creation and youth participation through the provision of intermediated financing to KCB Bank Kenya which has significant outreach to EIB's target groups. Consequently, the project is expected to contribute to SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reducing Inequalities).

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.

Under EFSD+ Guarantee