AfDB approves Sh5bn Chase Bank loan for SMEs

Corporate News

The shilling has firmed in recent weeks due to inflows of dollars from offshore investors. PHOTO | FILE  The shilling has firmed in recent weeks due to inflows of dollars from offshore investors. PHOTO | FILE

By ALLAN ODHIAMBO

The African Development Bank (AfDB) has approved a $50 million (Sh5 billion) loan to Chase Bank to boost its lending capacity to small and medium-sized businesses.

The loan will mainly benefit youths who rely on Chase Bank’s SME lending portfolio.

“Chase Bank’s focus on SMEs is expected to produce significant development outcomes for the proposed line of credit, given the importance of SMEs to Kenya’s economic growth.” AfDB said.

“This includes the creation of an estimated 500 jobs for sub-projects funded as a result of the loan, as well as additional government revenues from taxes paid by SMEs.”

This line of credit will also support efforts by the Bank to improve Kenya’s SMEs access to financing and complement support extended to Kenya’s SMEs by both the AfDB and other development partners, it further said.

Chase Bank has a large SME banking product portfolio, which includes SME-focused overdraft facilities, term loans and asset financing products. Approximately 70 per cent of Chase Bank’s loan book is advanced to SMEs.

Chase Bank intends to generate more than Sh90 billion in new loans, of which Sh63 billion will be new SME loans. The growth will be funded through a combination of new customer deposits, funds mobilised from equity and debt investors, including direct foreign investments (DFIs), as well as a bond issuance.

The approved AfDB line of credit will complement these sources. Though key to the economy’s growth, SMEs in Kenya have remained subdued due to lack of access to credit for startup and expansion.

They comprise nearly 90 per cent of all businesses in the country and account for a total of 82 per cent of job opportunities.