WASHINGTON, D.C., June 3—The International Finance Corporation (IFC) today signed a financing agreement for a US$1 million equity investment to transform Kenya Rural Enterprise Program (K-Rep) into a commercial, micro-enterprise bank known as K-Rep Bank. This is IFC's first direct investment in a micro-enterprise financial institution.
K-Rep Bank will continue to provide lending and savings services to Kenyan micro-entrepreneurs who do not have access to formal financial institutions due to lack of collateral and high transaction costs. K-Rep Bank will lend to either individual clients or groups, whereby credit is extended to members of a group who are jointly held accountable for repayment.
The Kenya Rural Enterprise Program was initially established to provided training, technical assistance and financial management systems to Kenyan Non-Governmental Organizations providing credit to micro-entrepreneurs. It expanded its activities to include its own direct lending programs for micro-enterprises. Today, it has the largest micro-enterprise finance operation in Africa with a client base of over 15,000. K-Rep's average loan size is about US$300 and has achieved an average repayment rate of about 95 percent over the past five years.
"IFC's investment in K-Rep Bank exhibits our pioneering efforts to support and strengthen commercially viable microlending institutions, a catalyst for job creation and private sector development among low-income groups," said Mr. Tei Mante, Director, IFC. "We expect K-Rep Bank to help extend IFC's reach to the many micro- and small-scale businesses throughout Kenya."
In addition to IFC the other major shareholders of K-Rep Bank will be South Shore Bank of Chicago; the African Development Bank; Triodios, a Dutch non-governmental organization; and the Netherlands Development Organization (FMO).
Present at the signing ceremony in Nairobi were Mr. Mante; Mr. B. Kiplagat, Chairman of K-Rep; Mr. Bahadurali Jetha, Manager, Capital Markets Division, IFC's Sub-Saharan Africa Department; Mr. Kimanthi Mutua, Managing Director of K-Rep; Mr. Michael Hooper, IFC's Resident Representative in Nairobi; Mr. Mengistu Alemayehu, Investment Officer, IFC's Sub-Saharan Africa Department; representatives of other shareholders; as well as Kenyan private sector and government representatives.
IFC to Finance CFC Bank Kenya The International Finance Corporation (IFC) today signed an investment agreement with CFC Bank Limited of Kenya for a loan option facility of US$10 million. The hedge facility, a new product introduced by IFC, will allow CFC Bank the right, but not the obligation, to draw down short- and medium-term loans from IFC.
Credit Finance Corporation Limited was established as the first independent asset based financing company in Kenya in 1955 and was listed on the Nairobi Stock Exchange in 1970. In 1995, the Corporation converted into a commercial bank, CFC Bank Limited, offering a wide range of products and services similar to those offered by established banking competitors.
"The IFC hedge facility will enable CFC Bank to onlend short-term foreign currency deposits to its corporate customers in the private sector for a variety of uses including medium-term loans and financial leasing transactions," said Mr. Tei Mante, Director, IFC. "CFC Bank can tap the facility as and when needed to meet temporary shortages of foreign currency in the local market."
Present at the signing ceremony in Nairobi were Mr. Mante; Mr. Bahadurali Jetha, Manager, Capital Markets Division, IFC's Sub-Saharan Africa Department; Mr. Majmudar, Managing Director, CFC Bank; Mr. R.J. Barry and Mr. Dave, General Managers, CFC Bank; Mr. Michael Hooper, IFC's Resident Representative in Nairobi; and Mr. Mengistu Alemayehu, Investment Officer, IFC's Sub-Saharan Africa Department.
To date, IFC has invested over US$70 million for 24 projects in Kenya.
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
