MICROCAPITAL BRIEF: BOA Kenya Nets IFC Guarantee for Lending to Women-led, Climate-focused SMEs; Potential Performance-based Incentives

The International Finance Corporation (IFC), a member of the World Bank Group, recently announced a partnership with Bank of Africa (BOA) Kenya to expand its lending to women-led and climate-focused small and medium-sized enterprises (SMEs). IFC will reimburse BOA Kenya for half of the losses it may incur on a set of loans to qualifying SMEs, up to the local-currency equivalent of USD 5 million.

Ronald Marambii, Managing Director of BOA Kenya, stated, “IFC’s risk-mitigation product, combined with general and targeted advisory services support, will help BOA Kenya decrease risk and scale up its lending to SMEs in its most challenging markets. Also, it will help us transform into an SME-focused bank with branches across Kenya.”

As part of the agreement, BOA Kenya has the opportunity to earn performance-based incentives from the Global SME Finance Facility and the Woman Entrepreneurs Opportunity Facility (WEOF). WEOF was launched in 2014 to promote access to financial services for women entrepreneurs in developing countries. The Global SME Finance Facility, which is funded by the UK and Dutch governments, invests in SME funders in emerging markets.

Founded in 2004, BOA Kenya is a commercial banking unit of BOA Group, which is headquartered in Benin and Senegal. BOA Kenya provides banking services to corporate, SME and retail clientele through 27 branches. As of September 2021, it reported total assets of KES 39.2 billion (USD 346 million), customer deposits of KES 26.8 billion (USD 237 million) and net loans and advances to customers of KES 15 billion (USD 133 million). Founded in 1982 in Mali, BOA Group provides financial services in 18 countries through 17 commercial banks and several other subsidiaries. During 2020, it recorded net income of EUR 103 million (USD 116 million), resulting in a balance sheet of EUR 8.7 billion (USD 9.9 billion). BOA Group is a member of the BMCE Group, whose name derives from Morocco’s former Banque Marocaine du Commerce Exterieur.

Founded in 1956, IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. During the 12 months ending June 2021, IFC reported disbursements of USD 31 billion, of which about one third was mobilized from partner institutions. During the same period, the institution garnered USD 4.2 billion in net income from USD 105 billion in total assets.

By Sheen Gupta, Research Associate

Sources and Additional Resources

IFC press release
https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=26763

BOA Kenya homepage
https://www.boakenya.com/

BOA Kenya 2021 annual report
https://www.boakenya.com/about-boa/financial-results/

BOA homepage
https://bank-of-africa.net

WEOF webpage
https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/bf/focus-areas/bf-sme/bf-weof

Global SME Finance Facility webpage
https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/bf/focus-areas/bf-sme/bf-gsmef

Previous MicroCapital article on IFC
https://www.microcapital.org/microcapital-brief-bfiu-ifc-to-develop-e-kyc-infrastructure-to-expand-financial-inclusion-in-bangladesh/

Previous MicroCapital article on WEOF
https://www.microcapital.org/microcapital-brief-ifc-lends-12m-to-garanti-bbva-leasing-romania-for-microenterprises-smes-including-women-owned-enterprises/

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