Cooperative Bank has secured a USD 25 million (KES 3.4 billion) loan from DEG of Germany to provide lending to Small and Medium Enterprises (SMEs) owned or managed by women. The funds will be used to set up a credit line exclusively for micro, small and medium-sized enterprises.
This financing is the first to be made by DEG, with a guarantee from the European Fund for Sustainable Development Plus (EFSD+) to secure part of the loan. The credit line will help to close existing gaps in funding for SMEs on the local credit market in Kenya, where interest rates remain high.
Commercial bank lending to the private sector in Kenya has dropped to 10.3 per cent in February compared to 13.8 per cent in January 2024, according to the latest data from the Central Bank of Kenya. The Co-op Bank’s CEO, Gideon Muriuki, said the financing from DEG is coming at the right time, as there is a strong need for stronger support for businesses owned or managed by women.
DEG, which has partnered with Co-op Bank since 2013, said the investment is an essential contribution to supporting SMEs in developing countries in general and SMEs run by women in particular. Monika Beck, a member of DEG’s management board, said all of the funds will go to female entrepreneurs.
The current transaction contributes to the UN Sustainable Development Goals (SDGs), notably SDG 8 ‘Decent work and economic growth’ and SDG 5 ‘Reduced inequalities’ as well as to the EU’s Global Gateway Initiative.
Last year, Co-op Bank set aside KES 14.1 billion for affordable loans to small businesses. The bank has joined other lenders in supporting the growth of SMEs in Kenya. Supporting SMEs owned or managed by women is crucial for promoting gender equality and economic growth.
Women entrepreneurs face unique challenges, including limited access to finance, markets, and networks. By providing credit lines exclusively for women-led SMEs, financial institutions like Co-operative Bank can help to address these barriers and unlock the potential of female entrepreneurs.
