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Kenya

Shot in the arm for Faulu Kenya

NAIROBI, Kenya, Jul 20 – The International Finance Corporation (IFC), Standard Chartered Bank Kenya and Faulu Kenya have entered into a Sh450 million loan agreement to finance Faulu operations in the country.

Speaking during the signing on Monday, Faulu Managing Director Lydia Koros said the loan was timely as the company planned to roll out an ambitious expansion program.

“Our vision is to reach the un-banked population in Kenya who have previously not been served by the existing formal institutions,” she said.

She said recent studies revealed that 32.7 percent of Kenyans still do not have access to financial services.

“This provides Faulu with the confidence that need for financial services continues to be necessary and we feel many people can be reached if relevant and innovative solutions are offered.”

IFC will provide a partial credit guarantee for 80 percent of the loan from the Standard Chartered Bank and will also provide advisory support to facilitate Faulu’s transformation to a deposit-taking institution.

Standard Chartered CEO Richard Etemesi said the bank was committed to providing access to financial services for the microfinance sector.

In light of the global financial crisis Standard Chartered Bank partnered with IFC to set up the Global Trade Liquidity Program with the aim of boosting trade across the globe.

“The program is a funded risk participation program that aids in extending trade finance to underserved business people in developing countries,” Mr Etemesi explained.

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In May 2009 Faulu became the first microfinance institution in Kenya to be credited as a deposit taking institution after receiving a licence from the Central Bank of Kenya.

IFC Vice President for Human Resource and Administration Dorothy Berry said limited access to finance was a key constraint to private sector growth in Africa.

The Finances 2009 study by the Financial Sector Deepening Trust finds that one in five Kenyans has a formal relationship with a financial institution which severely hampers the ability of small businesses to access finance.

“Promoting a strong financial system is essential for sustainable economic development and one of the goals of IFC is to reduce poverty and improve people’s lives,” she said.

She added microfinance institutions are one of the avenues of making funds easily accessible to those especially in the rural areas.

“Microfinance is a central part of IFC’s strategy to support the development of a vibrant private sector in Africa."

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