NAIROBI, Oct. 6 (Xinhua) -- The African Development Bank (AfDB) and the Commercial Bank of Africa (CBA) on Friday signed a 90 million U.S. dollars deal that will boost lending to Kenya's small and medium-sized Enterprises (SMEs).
AfDB Director General for the East African Regional Hub Gabriel Negatu told a media briefing in Nairobi that under the agreement they will extend the line of credit to the Kenyan bank in two tranches.
"The first portion of 50 million dollars will be for onward lending to SMEs in the infrastructure, transport, construction and agricultural sectors, while the second portion of 40 million dollars will be reserved for trade finance," Negatu said.
AfDB will provide the funding to CBA in foreign currency at lower than commercial lending rates.
According to the pan African bank, SMEs have difficulty in accessing foreign currency in the international markets due to Kenya's systematic risks.
Negatu said that the financing is part of the bank's commitment to promote inclusive economic development by increasing SME's access to credit.
The trade finance line of credit will represent the AfDB's first intervention in East Africa in the trade finance sector.
CBA has presence in Kenya, Uganda, Tanzania and Rwanda and has over 22 million accounts in its Mshwari digital banking platform.
CBA Group Managing Director Isaac Awuondo said that the financing will enhance the bank's ability to target the SMEs which are a critical pillar of Kenya's economy.
Awuondo said that SMEs account for 80 percent of employment opportunities in both formal and informal sectors.
He added that SMEs typically face difficulty in accessing long-term finance required to fund development projects.
"So the financial assistance will help to overcome the critical challenge," he said.