IFC, a member of the World Bank Group, will provide a $105m loan to the Co-operative Bank of Kenya (Co-op Bank) to support lending to small and medium businesses, women entrepreneurs and the housing sector.

Oumar Seydi, IFC Director for East and Southern Africa, said: "Small and medium enterprises make up more than 95% of all firms in Africa, and are generating millions of jobs on the continent. IFC works with local financial institutions like Co-op Bank to provide innovative and specialized services to entrepreneurs, helping them grow their businesses and drive African economies.”

The second largest bank in Kenya by total assets, Co-op Bank has 143 branches across the country and a subsidiary in South Sudan.

SMEs account for 18% of the Bank’s lending, or close to $386m as of June 30, 2015.

Co-op bank will use IFC’s financing to extend a wider range of financial services to entrepreneurs, with $30m earmarked for women-owned businesses.

IFC estimates that close to 40% of Kenya’s SMEs are owned by women, who often have more barriers to gaining access finance than their male counterparts.

Alongside the investment, IFC will advise Co-op Bank on how to tailor products to the needs of women entrepreneurs.

Through IFC’s Banking on Women program, this project is supported by the Women Entrepreneurs Opportunity Facility, the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs, launched by IFC and Goldman Sachs’ 10,000 Women initiative in 2014.

The loan will enable Co-op Bank to promote affordable housing in Kenya by expanding its mortgage lending and construction finance.

Rapid urbanization has led to a housing shortage of two million units in Kenya, which will require private investment to build.

With only 25,000 loans outstanding in a country of more than 10 million households, the mortgage market is underdeveloped.

IFC will work with Co-op Bank to streamline mortgage lending and support affordable housing projects.

Dr. Gideon Muriuki, CEO of Co-op Bank, said: “The IFC funding comes at a most appropriate time in view of the critical need to support the growth in the economy. The long-term tenure of the facility boosts Co-op Bank’s ability to offer financing solutions that are better structured and priced to fulfil the long-term financing needs of customers.”

IFC’s new investment in Co-op Bank continues a relationship that began in 2012, when IFC invested $60m to expand the bank’s SME portfolio and support the agribusiness sector.

The current $105m loan was mobilized in partnership with IFC’s Managed Co-Lending Portfolio Program, a new syndications platform that allows investors to passively participate in IFC’s future loan portfolio.
The investment marks IFC’s first syndication under the program in Kenya.

IFC has partnered with ten banks in Kenya to support entrepreneurs and small business growth.
During the last fiscal year, IFC’s work with financial institutions helped provide loans to two million entrepreneurs in Africa.