Business
DTB to disburse $26m World Bank funding to SMEs in EA
Employees of Petmu Canvas Limited in Nairobi sew tents and school bags. SMEs in East Africa expected to benefit from $26million World Bank funding. File Photo
Posted Monday, October 18 2010 at 18:30
In a show of confidence in the positive growth of small and medium enterprises in East Africa, the International Finance Corporation has signed a $26 million long-term funding that will be disbursed through Diamond Trust Bank.
The IFC, the private sector lending arm of the World Bank, said the money would enhance DTB’s capacity to support the SME sector by providing long-term funding in Kenya, and trade financing in Tanzania and Uganda.
“The agreements will encourage access to finance for small and medium enterprises and facilitate trade in East Africa, ” said a statement from DTB.
IFC will provide financing of $20 million to DTB Kenya to improve the capacity to provide long term lending to clients, especially SMEs.
DTB Tanzania and DTB Uganda signed separate trade finance guarantee agreements of $3 million each to increase the trade finance instruments issued on behalf of SMEs that import goods into East Africa, thus supporting the region’s private sector and promoting economic development.
“This will leverage our ability to provide long term finance as well as increase our trade finance activities, helping our local SMEs grow and compete in the international marketplace,” said Nasim Devji, DTB Group CEO.
Just last week, Ms Devji won the Leading African Woman prize at this year’s Africa Investment and Business Leaders Awards.
IFC has been a shareholder of DTB Kenya since 1983 and holds a 9.85 per cent stake. In 2008, IFC provided Ksh2 billion ($25 million) to support the bank’s expansion and enable it increase lending to SMEs.
It followed this with a Ksh400 million ($5 million) trade finance guarantee in 2009.
DTB’s other principal shareholders are the Aga Khan Fund for Economic Development (AKFED), the economic development arm of the Aga Khan Development Network, and Habib Bank, an AKFED subsidiary.
DTB plans to continue expanding across East Africa, from the current 57 to nearly 70 branches by the end of the year and over 100 by 2013.
“Having established a new banking subsidiary in Burundi last year, in which IFC is a key shareholder, we are exploring the possibility of establishing operations in other parts of East and Southern Africa over the next three to four years,” said Ms Devji.
SMEs
Due to its focus on SMEs, DTB defied a turbulent economic environment to maintain a double digit growth in earnings over the third quarter of the year, riding on robust growth in interest and non-funded income.
The bank said its net profits rose 16.2 per cent to Ksh901 million (about $11.2 million), which places it among the few banks that have posted double digit growth.
The bank’s general manager for finance, Alkarim Jiwa, attributed the performance to the bank’s expansion and the resilience of SMEs — which account for 70 per cent of its business.
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