In the latest display of Asia’s appetite for African investment, China Development Bank (CDB) has signed a Sh4bn (US$50.89mn) loan to Kenya’s Equity Bank for on-lending to small and medium-sized enterprises (SMEs).
The loan facility, which will be focused on agri-processing and trade finance activities, follows the bank’s recent reduction of its base lending rate to 12% from 15% after identifying the need to offer more long-term borrowing facilities.
However, SMEs will have access to loans below the base lending rate, with businesses being offered 7 and 9% interest for three to seven-year tenors.
James Mwangi, chief executive officer and managing director at Equity, says: “This facility will allow us to grant our SME customers long-term facilities to spur economic activities across the country. The SME sector has faced the challenge of high costs of credit, bank charges and fees, limiting their potential contribution to the country’s economy.”
This comes as part of CDB’s US$5bn China-Africa development fund , which was officially approved in March 2007, for the development of SMEs in Africa.
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