Co-Op Bank signs a Sh5.b deal to boost SMEs

Co-Op Bank signs a Sh5.b deal to boost SMEs

Cooperative Bank of Kenya has signed a Sh5.1 billion loan agreement with the International Finance Corporation (IFC) to increase its credit to Small and Medium Enterprises in the country.

According to Gideon Muriuki the bank’s Managing Director, the loan which has seven years tenure will also be used to support agriculture projects.

He further said that the first consideration that the bank will make is not based on where they come from but a person’s ability to pay back. Because by the time the bank is to repay the facility to IFC I have to ensure that the customers have paid.

The bank has however opted to give the loans to customers in dollars therefore only targeting those who get their income in foreign currencies so as to hedge on the foreign exchange risks.

Co-Op bank recently received a Sh7.5 billion fund from European Investment Bank (EIB) to support the SMEs.

Oumar Seydi who is the new IFC director for East and Southern Africa called on the bank not to put stringent measures while extending the loans to the SMEs as it has been the biggest challenge for credit access.

He further reiterated that IFCs aim is to grow businesses and reduce poverty through the private sector. Therefore it will provide its instruments based on market rates and it trust its partners in how they run their operations.

The banks net loan book in the third quarter of 2012 increased by 11.3 percent to Sh118.4 billion up from Sh106.4 billion in the same period.

Meanwhile Muriuki said that the bank has finalized its joint venture from its subsidiary in South Sudan where the latter’s government holds 49 percent stake with the bank holding 51 percent.

The government of South Sudan will hold the stake in trust for three years before handing it over to the Co-Operative movement that is being developed in that market.