KCB Bank Kenya has inked a deal with Swedish International Development Cooperation Agency (SIDA) to insure loans for Small and Medium Enterprises (SMEs).
The Ksh1 billion guarantee seeks to derisk the SMEs and facilitate their access to credit to support their growth.
The seven-year guarantee facility seeks to strengthen the lender’s efforts to provide credit to SMEs who face hurdles in accessing affordable loans to boost their businesses.
Speaking during the signing ceremony, KCB Bank Acting Director of Retail Banking, Michael Kung’u noted that the deal will help provide much-needed momentum for SMEs to tap into the bank’s expanded portfolio of SME financing options to enable them to contribute fully to the growth of Kenya’s economy.
“We are excited about this new instrument as it offers us the flexibility to work with SMEs and the refugee population in their ambitions to support their entrepreneurial journey,” said Kung’u.
“The SME guarantee will therefore go a long way in diversifying the SMEs’ financing resources and reducing collateral requirements, thereby enabling them to play a leading role in achieving economic and social development,” he added.
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Risk-sharing facilities are a key tool to support knowledge gaps by lenders, broadening their SME lending while mitigating risk and allowing them to build capabilities and track records in serving niche market segments like SMEs and refugees.
“Sweden’s Development Cooperation through the Swedish International Development Cooperation Agency (SIDA) aims to create opportunities for better living conditions for people living in poverty and under oppression,” said Swedish Ambassador to Kenya Caroline Vicini.
“This initiative will enable Sweden’s engagement to go beyond the Official Development Assistance (ODA) and focus more on innovative financing approaches to mobilize domestic resources and external private capital to reach the most vulnerable communities in Kenya,” she added.
The partnership demonstrates the lender’s commitment to SMEs by availing practical and attractive ways for SMEs to access the capital they need to help them grow.