WASHINGTON, D.C., June 3—The International
Finance Corporation (IFC) today signed a financing agreement for a US$1
million equity investment to transform Kenya Rural Enterprise Program (K-Rep)
into a commercial, micro-enterprise bank known as K-Rep Bank. This is IFC's
first direct investment in a micro-enterprise financial institution.
K-Rep Bank will continue to provide lending and savings services to Kenyan
micro-entrepreneurs who do not have access to formal financial institutions
due to lack of collateral and high transaction costs. K-Rep Bank will lend
to either individual clients or groups, whereby credit is extended to members
of a group who are jointly held accountable for repayment.
The Kenya Rural Enterprise Program was initially established to provided
training, technical assistance and financial management systems to Kenyan
Non-Governmental Organizations providing credit to micro-entrepreneurs.
It expanded its activities to include its own direct lending programs for
micro-enterprises. Today, it has the largest micro-enterprise finance operation
in Africa with a client base of over 15,000. K-Rep's average loan size
is about US$300 and has achieved an average repayment rate of about 95
percent over the past five years.
"IFC's investment in K-Rep Bank exhibits our pioneering efforts to
support and strengthen commercially viable microlending institutions, a
catalyst for job creation and private sector development among low-income
groups," said Mr. Tei Mante, Director, IFC. "We expect K-Rep
Bank to help extend IFC's reach to the many micro- and small-scale businesses
In addition to IFC the other major shareholders of K-Rep Bank will be South
Shore Bank of Chicago; the African Development Bank; Triodios, a Dutch
non-governmental organization; and the Netherlands Development Organization
Present at the signing ceremony in Nairobi were Mr. Mante; Mr. B. Kiplagat,
Chairman of K-Rep; Mr. Bahadurali Jetha, Manager, Capital Markets Division,
IFC's Sub-Saharan Africa Department; Mr. Kimanthi Mutua, Managing Director
of K-Rep; Mr. Michael Hooper, IFC's Resident Representative in Nairobi;
Mr. Mengistu Alemayehu, Investment Officer, IFC's Sub-Saharan Africa Department;
representatives of other shareholders; as well as Kenyan private sector
and government representatives.
IFC to Finance CFC Bank Kenya The International Finance Corporation (IFC)
today signed an investment agreement with CFC Bank Limited of Kenya for
a loan option facility of US$10 million. The hedge facility, a new product
introduced by IFC, will allow CFC Bank the right, but not the obligation,
to draw down short- and medium-term loans from IFC.
Credit Finance Corporation Limited was established as the first independent
asset based financing company in Kenya in 1955 and was listed on the Nairobi
Stock Exchange in 1970. In 1995, the Corporation converted into a commercial
bank, CFC Bank Limited, offering a wide range of products and services
similar to those offered by established banking competitors.
"The IFC hedge facility will enable CFC Bank to onlend short-term
foreign currency deposits to its corporate customers in the private sector
for a variety of uses including medium-term loans and financial leasing
transactions," said Mr. Tei Mante, Director, IFC. "CFC Bank can
tap the facility as and when needed to meet temporary shortages of foreign
currency in the local market."
Present at the signing ceremony in Nairobi were Mr. Mante; Mr. Bahadurali
Jetha, Manager, Capital Markets Division, IFC's Sub-Saharan Africa Department;
Mr. Majmudar, Managing Director, CFC Bank; Mr. R.J. Barry and Mr. Dave,
General Managers, CFC Bank; Mr. Michael Hooper, IFC's Resident Representative
in Nairobi; and Mr. Mengistu Alemayehu, Investment Officer, IFC's Sub-Saharan
To date, IFC has invested over US$70 million for 24 projects in Kenya.
IFC, a member of the World Bank Group, is the largest multilateral source
of equity and loan financing for private sector projects in developing