Bank provides Sh11.3bn for loans to SMEs

The Central Bank of Kenya in Nairobi. Analysts have attributed the declining yields on government securities to monetary easing by the bank. Photo/File  Nation Media Group

 

 

By SIMON CIURI

In Summary

• Kenya’s Chase Bank and Tanzania’s East African Development Bank and National Microfinance will lend the money at an interest rate of 7.7 per cent to offer greater access to SMEs that usually face problems raising money for expansion.
• The lending is restricted to firms in agriculture, fishing, education, health and manufacturing sectors.
• Chase Bank will receive Sh729.8 million while the East African Development Bank will get Sh2.8 billion. National Microfinance Bank has been allocated Sh7.8 billion.

The European Investment Bank has offered three regional banks Sh11.3 billion in soft loans for lending to small and medium-sized firms.

Kenya’s Chase Bank and Tanzania’s East African Development Bank and National Microfinance will lend the money at an interest rate of 7.7 per cent to offer greater access to SMEs that usually face problems raising money for expansion.

The lending is restricted to firms in agriculture, fishing, education, health and manufacturing sectors.

EIB said the loan is part of its strategy to fund enterprises that are critical for economic growth, creation of jobs and reduction of poverty in East Africa.

“Access by small and medium-sized business to long term finance is essential for creating new jobs. This engagement will enable entrepreneurs to establish firms and engage investments in new markets,” said Pim Van Ballekom, EIB’s vice-president for sub-Saharan Africa.

Chase Bank will receive Sh729.8 million while the East African Development Bank will get Sh2.8 billion.


National Microfinance Bank has been allocated Sh7.8 billion.

Paul Njaga, the head of finance at Chase Bank said the grant would enable the bank to give long- term loans to SMEs for asset finance and working capital.

“The fund will open opportunities to private investors which has been the biggest challenge due to lack of startup capital,” he said.