NAIROBI (Xinhua) — Small and medium scale enterprises (SMEs) institutions across East Africa are set to benefit from a new funding made available by the European Investment Bank (EIB) in a move that will enable them finance their expansion plans to take advantage of the expanding intra- regional market.
Three Kenyan financial institutions today signed for new loan facility of 65 million U.S. dollars for onward lending to SMEs that have been termed as the growth engines of economies like Kenya’s and are crucial in the creation of employment opportunities. Microfinance institution Faulu Kenya (5.2 million dollars), the Cooperative Bank (26 million dollars) and Housing Finance (26 million dollars), a mortgage lending company, signed to the new long term loan facility known as the EAC Microfinance Facility.
Housing Finance is expected to use the money to develop affordable houses that are in short supply in the country. The rest of the money will be loaned to institutions in Uganda, Tanzania and Rwanda. Officials of the Kenyan beneficiary institutions said the funding will go a long way in enabling them expand their customer reach and in the creation of employment opportunities across the country.
The officials said they are confident business slowdown expected in the run-up to the general elections will not affect the lending as it is meant for long term projects. Kenyans are expected to go for elections by March 2013. “Just as an example, the property development projects that are to be started today will be delivered in the market in 2014. So we do not foresee any short term effects on the uptake of the financing by our customers,” said Frank Ireri, the Managing Director of the Housing Finance.
“This funding will enable us to reach out to more and build the capacity if SMEs across the country,” said John Mwara, the Managing Director of Faulu Kenya. The Kenyan entrepreneurs benefiting from this funding through the financial institutions will also benefit from technical assistance to support preparation for business plans, improve management skills and increase operational efficiency.
EIB recently signed a 26 million dollars finance agreement with two other Kenyan banks; the ABC Bank and Consolidated Bank, for long-term lending under The European Investment Bank’s Private Enterprise Finance Facility II for local businesses seeking to expand or invest in new activities. (Xinhua)