, NAIROBI, Kenya, Jan 1 – Banks are reporting an increase in foreign currency denominated loans, compared to those quoted in shillings.
Equity Bank’s Chief Executive Officer James Mwangi said the appetite for the foreign currency denominated credit is surging, as customers seek to cushion themselves from the volatile exchange rate.
Mwangi said this will help inject foreign currencies into the market and stabilise the local unit.
“The loan facility is available to all subsidiaries in the East African region. The loan will help inject a large amount of foreign currency earnings into the country and will help stabilise as well as cushion the shilling against the volatile foreign exchange rate and the economy,” Mwangi said.
He spoke after signing a loan agreement worth Sh2 billion with the German Development Bank (GDB) that will see their Small and Medium Enterprise (SME’s) customers have access to competitively priced loans.
“We are trying to avoid the high interest rates that entrepreneurs and SME’s face when starting. This will enable them to access loans in foreign currency. Those who had borrowed in Kenya shillings will now be able to take foreign currency loans and repay at an interest rate of between five to 12 percent depending on the customers or businesses risk factor.” He stated.
The funds provided by the German Development Bank will be used to expand and strengthen Equity’s lending activities as well as the absorption capacities of their customers and is designed to provide for long term sustainability of a particular field of business.
Managing Director for GDB, Piet Kleffmann said they have invested Sh23 billion for onward lending to Micro Finance institutions over 11 years.
Kleffmann further added the loan has been allocated to the bank because of its regional reach, as well as its high rating by the World Bank and other development partners and institutions in the world.
German Ambassador to Kenya, Margit Hellwig-Boette said her country will continue to help the country and Kenyans to develop economic sustainability.