KCB Bank has received a Kes 1 billion seven-year guarantee facility to insure loans issued to small businesses.

This is after the Bank signed an agreement with the Swedish International Development Cooperation Agency (SIDA) to increase lending to small and medium-sized enterprises deemed risky, thus facing credit access challenges.

KCB Bank Acting Director of Retail Banking Michael Kung’u stated that the facility will provide much-needed momentum for SMEs to tap into the bank’s expanded portfolio of SME financing options to enable them to contribute fully to the growth of Kenya’s economy.

“We are excited about this new instrument as it offers us the flexibility to work with SMEs and the refugee population in their ambitions to support their entrepreneurial journey,” Kung’u said.

Further, he said the facility go a long way in diversifying the SMEs’ financing resources and reducing collateral requirements, thereby enabling them to play a leading role in achieving economic and social development.

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Risk-sharing facilities are a key tool to support knowledge gaps by lenders, broadening their SME lending while mitigating risk and allowing them to build capabilities and track records in serving niche market segments like SMEs and refugees.

On her part, Swedish Ambassador to Kenya Caroline Vicini said the Development Cooperation through the Swedish International Development Cooperation Agency (Sida) aims to create opportunities for better living conditions for people living in poverty and under oppression.

“This initiative will enable Sweden’s engagement to go beyond the Official Development Assistance (ODA) and focus more on innovative financing approaches to mobilize domestic resources and external private capital to reach the most vulnerable communities in Kenya.”