Sidian Bank, Victoria Commercial Bank secure Sh3.36bn funding to boost SMEs
Sidian Bank chief executive officer Titus Karanja (left) and the bank’s board Chairman James Mworia during the unveiling of the bank’s new look after rebranding from K-Rep Bank to Sidian Bank at its headquarters in Nairobi on April 4, 2016.
Two lenders, Victoria Commercial Bank (VCB) and Sidian Bank, have landed separate financing deals totalling Sh3.36billion to support the growth of small and medium enterprises (SMEs) in the country.
In one of the deals, VCB has secured a Sh2.4billion loan from the Arab Bank for Economic Development in Africa (BADEA) to support its small and medium enterprises (SMEs) portfolio. The deal was negotiated by Nimai Financial Sector Advisory of Dubai.
“I am extremely delighted about the partnership between VCB and BADEA, culminating in a credit extension of $20 million” VCB chief executive officer, Yogesh Pattni said.
Separately, Sidian Bank has signed an agreement with two US agencies for cover against defaults on health sector SME loans worth $8 million (Sh965 million).
The portfolio guarantee is being offered by the United States International Development Finance Corporation (DFC) and United States Agency for International Development (USAID). It is part of the lender’s effort to bridge the financing gap facing the health care sector in Kenya.
Targets clinics
The facility targets clinics, hospitals, pharmacies, personal protective equipment providers and diagnostic laboratories, covering any shortfall they have in their collateral when borrowing from Sidian Bank.
“Through provision of guarantees by the bank, our customers who have a shortfall on security required for credit facilities are able to access much-needed credit,’’ said Sidian Bank CEO, Chege Thumbi.
“I encourage all healthcare practitioners and service providers in the value chain to leverage from this opportunity, therefore through the provision of guarantees by the bank, our customers who have a shortfall on security required for credit facilities are able to access much-needed credit, scaling up their businesses.”
Expanding access to commercial bank financing is critical to the growth of the healthcare sector in Kenya, which has been chronically underfunded over the years.
USAID said that it has helped facilitate this guarantee to address challenges that currently constrain private sector healthcare growth, especially for under-served private providers.
Private sector
“Working with the private sector is important to achieve sustainable health interventions and this partnership will provide additional financial resources to small- and medium-sized private healthcare enterprises," said USAID Health Population and Nutrition Office Director John Kuehnle.
The facility will also help Sidian grow its SME and trade finance lending portfolio, on which it is hoping to leverage in the competitive banking sector which is dominated by large tier one lenders.
The bank is currently undergoing a change of ownership, following an announcement in June by its majority owner Centum of the sale of its 83.4 percent stake to Nigeria’s top lender Access Bank for Sh4.3 billion.
Access bank had earlier acquired a 99.98 per cent stake of Transnational Bank in 2020 from close associates of former President Daniel Arap Moi in a deal valued at Sh1.56 billion.
Access, which has assets of $25.5 billion, focuses on corporate retail banking and it is expected to boost the growth of Sidian, which will be merged with Transnational Bank which was renamed Access Kenya.
