International Finance Corporation and FMO, the Dutch entrepreneurial development bank, have announced a $50 million (Sh5.4 billion) loan to I&M Bank. This is to help small firms in obtaining funding. The fund will also help firms expand and withstand the consequences of Covid-19 on the economy.
The financing will help I&M Bank strengthen its regulatory capital position, allowing the bank to expand its business in Kenya. IFC and FMO will teach I&M bank staff on green finance as part of their support, so the bank can better support green investments like renewable energy and climate-smart agriculture.
“The funding line from IFC and FMO is most welcome and will enable I&M to provide cash flow support to small businesses whose operations have been affected by Covid-19 measures and the pandemic in general.” CEO I&M Bank, Kihara Maina.
In-business banking solutions
The IFC and FMO financing facility will also assist the bank’s strategic goals, such as in-business banking solutions such as trade and debt financing and business transaction services.
As part of its response to Covid-19, the IFC has prioritized strengthening the banking system’s capitalization to improve SMEs resilience. Covid-19 has had a significant impact on Kenya’s economy, disrupting trade, forcing many enterprises to close, and increasing the need for financing for others to continue operating.
“This project aligns with our strategy of reducing inequalities and enhancing financial support in the Covid-19 recovery period.” FMO Director Financial Institutions, Marnix Monsfort.
In May, the International Finance Corporation (IFC) announced a $2 billion (Sh218.4 billion) commitment to help small businesses, increase trade across Africa, and sustain and create jobs and business activity while the continent recovers from the pandemic.
The banking, manufacturing, agricultural, services, and infrastructure sectors make up the majority of IFC’s committed investment portfolio in Kenya having offered $395 million in loans to Kenyan businesses since March 2020.