MICROCAPITAL BRIEF: European Investment Bank (EIB) Lends $9.8m to Kenya’s Faulu Microfinance Bank to Finance Micro-, Small, Medium-Sized Enterprises (MSMEs)

The European Investment Bank (EIB), the long-term lending institution of the European Union (EU), recently lent Faulu Microfinance Bank (Faulu MFB), a Kenya-based microfinance institution (MFI), KES 1 billion (USD 9.79 million) under EIB’s East African Community Microfinance Facility [1]. This facility was launched in 2012 to boost lending to micro-, small- and medium-sized enterprises (MSMEs) in the region [2]. The recent loan to Faulu MFB is the second credit line offered to the bank by EIB, following the one disbursed in 2011 in the amount of EUR 4 million [3]. Charles K. Njuguna, the managing director of Faulu MFB, states that this new lending will “further bolster…financial inclusion and transformation in the communities” [3] of Kenya.

As of 2014, Faulu Microfinance Bank reported total assets of KES 12.4 billion (USD 122 million), a gross loan portfolio of KES 8.87 billion (USD 87 million), client deposits of KES 8.68 billion (USD 84.8 million) and approximately 73,500 active borrowers. As of 2014, EIB reported total assets of EUR 542 billion (USD 596 billion) and a loan portfolio of EUR 494 million (USD 542 million).

By Hye In Arielle Oh, Research Associate

About Faulu Kenya DTM Ltd (Faulu Microfinance Bank)

Faulu Kenya was founded in 1992 as a pilot microlending program of Food for the Hungry International (FHI), a US-based relief and development organization. In 2009, Faulu Kenya became officially registered as the first Deposit Taking Microfinance (DTM) Institution regulated by the Central Bank of Kenya under Kenya’s Micro-Finance Act. As of 2014, Faulu Microfinance Bank reported total assets of KES 12.4 billion (USD 122 million), gross loan portfolio of KES 8.87 billion (USD 87 million), client deposits of KES 8.68 bilion (USD 84.8 million) and approximately 73,500 active borrowers.

About European Investment Bank (EIB)

The European Investment Bank (EIB) was created in 1958 and serves as the long-term lending bank of the European Union (EU) as of 2014. In addition to supporting projects in EU member states, its main priorities include financing investments in likely future member states and EU partner countries, principally in the area of small and medium-sized enterprises. According to its website, “the EIB operates on a non-profit maximizing basis and lends at close to the cost of borrowing.” As of 2014, EIB reported total assets of EUR 542 billion (USD 596 billion) and a loan portfolio of EUR 494 million (USD 542 million).

Sources and Additional Resources:

[1] Standard Group: “Faulu lands Sh1 billion to fund small firms,”http://www.standardmedia.co.ke/procurement/article/2000177612/faulu-lands-sh1-billion-to-fund-small-firms

[2] MicroCapital: April 16, 2012, “MICROCAPITAL BRIEF: European Investment Bank (EIB) Launches $65m East African Community Microfinance Facility,” https://www.microcapital.org/microcapital-brief-european-investment-bank-eib-launches-65m-east-african-community-microfinance-facility/

[3] Kass International: “Faulu Customers to benefit from KSH 1 billion EIB lending programme,” http://kassfm.co.ke/home/index.php/component/k2/item/4381-faulu-customers-to-benefit-from-ksh-1-billion-eib-lending-programme.html

[4] Association of Microfinance Institutions in Kenya: “2014 Sector Report on the Microfinance Sector in Kenya,” http://www.microfinanzarating.com/index.php?option=com_content&view=article&id=347%3A2014-annual-report-on-the-microfinance-sector-in-kenya-&catid=40%3Anews-home-page&Itemid=59&lang=en

[5] European Investment Bank: “2014 Financial Report,”http://www.eib.org/infocentre/publications/all/financial-report-2014.htm

MicroCapital Universe: “Faulu Kenya DTM Ltd (Faulu Microfinance Bank),”https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Faulu+Kenya

MicroCapital Universe: “European Investment Bank (EIB),”https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Investment+Bank+%28EIB%29

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