Equity Bank is set to take a $100 million (Sh10 billion) long-term loan from the International Finance Corporation (IFC) to shore up the capital of its Kenyan banking subsidiary and lend to local small and medium-sized firms.
“The project consists of an up to $100 million (Sh10 billion) subordinated loan to Equity Bank (Kenya) Limited to strengthen the bank’s regulatory capital and support its lending programme to the underserved micro, small and medium enterprises (MSMEs) segment in Kenya,” IFC said in its investments disclosures. Part of the cash will also be used to support Equity’s financing of renewable energy projects. In addition to disbursing the loan, IFC will offer advisory services to the bank to strengthen its capacity to serve SMEs.
The global lender typically provides loans with an agreement that the funds will be used to lend to SMEs, women-owned firms and green energy projects as part of its social and environmental impact investing.
“The project is expected to have a catalytic effect on SME finance and sustainable energy finance in Kenya and attract more banks into these segments,” IFC said.