Sidian Bank secured 990 million shillings in financing from Dutch private equity firm Oikocredit for subsequent loans to small and medium-sized enterprises (SMEs).
The facility, repayable over five years, will help the bank focus on providing credit to small entrepreneurs.
“This is a new imprint of the bank’s strategic initiative to be the bank of choice for trade finance solutions and SMEs, especially given the impact of the pandemic on SMEs.” Sidian chief executive Chege Thumbi said on Wednesday.
The funds are part of the bank and the Dutch private equity firm’s efforts to boost financing for small businesses often facing barriers to accessing credit.
“This investment will allow the bank to lend more and thus contribute to the creation of sustainable jobs, which is in line with Oikocredit’s mission to create lasting social impact on low-income segments of society,” said Oikocredit’s Investment Director, East and Southern Africa Caroline Mulwa.
The partnership will support the growth of small businesses through the provision of collateral for the bank’s customer credit facilities.
Lenders tap into risk-sharing models such as SME guarantees from government and development institutions to limit their exposure to risk.
In July, Sidian also received 500 million shillings from the African Guarantee Fund (AGF) for loans to SMEs.