A branch of the Co-operative bank. Photo/Courtesy
Co-operative Bank of Kenya has partnered with the European Bank for Reconstruction and Development (EBRD) on a Sh13 billion (US$100 million) financing programme.
The programme aims at expanding access to foreign currency financing for Kenyan businesses.
The first US$50 million tranche has been executed through a cross-currency swap transaction, according to the bank.
The transaction is also the first cross-currency swap to use the Kenya Shilling Overnight Interbank Average (KESONIA), Kenya’s new benchmark reference rate.
The programme is expected to strengthen Co-op Bank’s capacity to provide long-term dollar financing at competitive pricing.
The bank said the financing will particularly benefit businesses in export-orientated sectors, including manufacturing, agriculture, agro-processing, horticulture, floriculture, logistics and tourism.
It will also support businesses whose revenues, supply chains or operational needs are linked to international markets and foreign currencies.
The financing programme is expected to improve access to foreign currency financing, provide longer repayment periods and increase the availability of trade finance and working capital facilities for exporters.
It will also support businesses involved in regional and global value chains and help them manage foreign exchange requirements linked to imports, exports and international contracts.
Co-operative Bank Group Managing Director and CEO Gideon Muriuki described the partnership as an important development for the bank’s financing of Kenyan businesses.
“Our partnership with the EBRD under this US$100 million currency swap programme represents an important milestone in our commitment to supporting Kenyan businesses with innovative financing solutions,” Muriuki said.
He said the first tranche would strengthen the bank’s ability to provide long-term foreign currency financing to businesses.
EBRD Regional Head of Local-Currency Portfolio Management Abdessamad Abouti said the transaction was significant for Kenya’s financial markets.
“This is an important milestone for Kenya’s financial markets,” Abouti said.
He added that the swap demonstrated how reforms could move from design to implementation, citing the development of KESONIA.
The programme is expected to support businesses seeking financing for machinery, equipment, technology, raw materials and other inputs needed for growth and competitiveness.
The partnership is part of Co-op Bank’s efforts to expand funding options for Kenyan enterprises and support international trade and investment.
