In a strategic move to bolster lending to micro, small, and medium-sized enterprises (MSMEs), particularly women-owned MSMEs (WMSMEs), the Co-operative Bank of Kenya has secured a significant $140 million senior unsecured loan from the International Finance Corporation (IFC). The loan, which comes with a seven-year term and a two-year grace period, is aimed at expanding the bank’s lending capacity in a critical sector that fuels Kenya’s economy.
This new loan follows a successful $75 million facility granted by IFC in 2020, which also focused on MSME lending. The current financing package demonstrates IFC’s continued confidence in Co-op Bank’s ability to support small businesses and drive economic growth. The funding is structured to share risks, with IFC set to mobilize an additional $40 million from other private sector lenders under its Managed Co-Lending Portfolio Program (MCPP).
One of the standout aspects of this loan is the targeted focus on women entrepreneurs. Co-op Bank has dedicated 25% of the loan to women-owned MSMEs, underscoring the institution’s commitment to financial inclusion and gender equality. By prioritizing access to affordable credit for female-led enterprises, Co-op Bank aims to empower women in business, contributing to a more balanced and inclusive economic landscape.
Dr. Gideon Muriuki, CEO of Co-op Bank, commented on the loan, emphasizing that this facility would not only improve the bank’s ability to finance MSMEs but also directly address the gap in funding for women entrepreneurs. “This partnership with IFC will enable us to significantly increase our support for MSMEs, which are the backbone of the Kenyan economy, and help bridge the gap in access to credit for women-owned businesses,” Muriuki said.
Kenya’s MSME sector accounts for over 80% of employment opportunities and contributes significantly to the country’s GDP. However, many MSMEs, especially those run by women, struggle to secure adequate financing to expand their operations. The $140 million loan is expected to provide much-needed liquidity to enable these businesses to grow, thrive, and sustain jobs in a tough economic climate.
With private sector credit insurers onboard to de-risk the loan, Co-op Bank is well-positioned to channel these funds efficiently and ensure that even smaller, often overlooked businesses receive the capital they need to scale. The funding will support the bank’s broader mission to drive sustainable growth in Kenya’s SME ecosystem while making a direct impact on poverty reduction and financial inclusion.
This IFC-backed facility represents not just a lifeline for MSMEs but also a vote of confidence in Co-op Bank’s robust governance and risk management frameworks. As Kenya continues its post-pandemic economic recovery, such financing is crucial in keeping small businesses afloat and providing them with the resources necessary for innovation and expansion.
Key Takeaways:
- Co-operative Bank secures a $140 million loan from IFC with a 7-year term and a 2-year grace period.
- 25% of the loan is earmarked for women-owned MSMEs (WMSMEs).
- IFC will mobilize an additional $40 million from other lenders.
- The loan follows a $75 million facility granted by IFC to Co-op Bank in 2020 for MSME support.
- Co-op Bank aims to enhance financial inclusion and drive sustainable growth in Kenya’s SME sector.
This new partnership between Co-operative Bank and IFC is set to unlock a wave of opportunities for Kenyan MSMEs, particularly for women entrepreneurs, as it strengthens the bank’s capacity to provide accessible and affordable credit to the heart of the economy.
