The International Finance Corporation (IFC) has committed $24.2 million in first-loss guarantees through partnerships with Kenyan lenders 4G Capital, Equity Bank Kenya and KCB Bank Kenya, aiming to unlock significantly more financing for underserved small businesses.
The transactions are the first in Africa under IFC’s Catalytic First Loss Guarantee programme. Of the $24.2 million commitment, $11 million is backed by the International Development Association’s Private Sector Window. IFC expects the structure to help mobilise about $120.2 million in additional lending and support approximately $144.4 million in total local-currency financing.
The financing will focus particularly on micro and small businesses, women-owned enterprises and companies involved in climate-related activities. By absorbing an agreed portion of potential initial losses, the guarantee structure reduces the risk faced by participating lenders and gives them greater capacity to finance borrowers that can struggle to meet conventional lending requirements.
For 4G Capital, the transaction marks the beginning of a financing partnership with IFC, while the arrangements with Equity and KCB expand existing relationships between the development finance institution and the two Kenyan banking groups. IFC says the programme is designed to address Kenya’s persistent financing gap for micro, small and medium-sized enterprises while supporting business growth and job creation
