The Co-operative Bank of Kenya has secured a Ksh12.95 billion (US$100 million) financing programme from the European Bank for Reconstruction and Development (EBRD) to expand access to foreign and local currency financing for Kenyan businesses.

🇰🇪 Breaking It Down

The programme has already reached its first stage, with the two institutions completing a Ksh6.47 billion (US$50 million) cross-currency swap that will increase Co-op Bank’s capacity to provide longer-term financing to businesses.

The transaction was completed on Monday, September 21, with the EBRD saying the arrangement will help expand access to financing denominated in Kenyan shillings while supporting businesses whose operations require funding in different currencies.

The deal also marks the first time the Kenya Shilling Overnight Interbank Average (KESONIA) has been used in a cross-currency swap transaction in the country.

📌 What You Need to Know

KESONIA is Kenya’s overnight interbank lending benchmark and is increasingly being used in financial transactions following reforms aimed at improving transparency and strengthening the country’s money market.

Through the swap arrangement, the EBRD is able to raise and manage funding in Kenyan shillings, allowing it to support lending in the local currency while reducing the foreign exchange exposure that can arise when businesses borrow in a currency different from their revenues.

For Co-op Bank, the arrangement is expected to expand its ability to offer competitively priced financing to businesses involved in sectors that require access to foreign currency, including trade and investment-related activities.

The financing can support businesses seeking funds for areas such as working capital, machinery, agriculture, equipment, technology and other investments linked to international markets.

The bank said the programme would strengthen its ability to mobilise foreign currency funding and provide longer-term financing to enterprises whose revenues or supply chains are connected to international markets.

Co-op Bank Treasurer Mutahe Karuoro said the transaction marked an important step in the development of Kenya’s financial markets , particularly through the use of KESONIA in a live transaction.

📰 Source: Kenyans.co.ke