FAMILY BANK SECURES KSH 3.3BILLION FROM EUROPEAN INVESTMENT BANK TO BOOST LENDING TO THE SMALL AND MEDIUM-SIZED BUSINESSES
Nairobi, Kenya, December 22nd 2015 – Family Bank has secured financing from the European Investment Bank barely two weeks after receiving a similar facility from a Netherlands Financier – Oiko Credit International. The Bank has received Ksh 3.33Billion (30Million Euros) to provide lower-cost long term loans to small and medium sized businesses in Kenya.
This is the second tranche by the European lender – with the first tranche of Ksh 2Billion having been secured two years ago. It also comes barely two weeks after the Bank secured a Ksh1Billion loan facility from Oikocredit East Africa – a subsidiary of Oikocredit International headquartered in Netherlands. This latest funding will further expand the SME portfolio of the Bank currently the main booster of its performance
Family Bank Managing Director Peter Munyiri said the second tranche by the European Investment Bank was a stamp of approval of the Bank’s SME support business model.
“ We are excited that EIB’s confidence in the Bank has enabled us to secure close to Ksh6Billion in two tranches – in only two years – being catalytic in mobilising significant amount of funds to help further spur the SME sector growth. This sector forms the bulk of revenue-generating and employment creation in our economy and should be enabled to play their rightful role in the economy.” said Mr. Munyiri.
Just as the facility by Oikocredit – the funding will be available for businesses across a wide variety of industry sectors under the SME category. The loans will be used for a wide variety of purposes .
“Innovativeness on our part is has created a great attraction. Capacity to address the ever increasing financial needs of SMEs is critical hence our multi-pronged fund raising approach – partly for lending activities and also addressing our capacity to serve those needs”, said Mr. Munyiri.
This latest facility makes Family Bank – a key partner – through which EIB enables small businesses access intermediated loans(EIB indirect loan to SMEs) to finance their projects. The benefit of EIB loans – through partner financial institutions like Family Bank – is that it is cheaper for lenders to borrow funds to lend to small businesses than from other sources. A participating lender passes on this cost advantage to eligible SMEs which means that small businesses directly benefit from the lender’s lower cost of borrowing.
The bank has also deployed a multi-pronged capital raising strategy – with a mix of both debt through the Ksh10Billion Bond – whose first tranche is currently trading at the NSE – and equity financing with increased global lenders’ interest. Part of these funds are earmarked for lending activities as well as fuelling the aggressive expansion that has seen its branch network reach 91 with three branches having opened in the past two weeks including Wote, Kahawa West and Mlolongo.