MICROCAPITAL BRIEF: IFC Loans $50m to Diamond Trust Bank Kenya to Support SMEs Challenged by COVID-19

To support small and medium-sized enterprises (SMEs) that are struggling during the COVID-19 pandemic, the International Finance Corporation (IFC), the private-investment arm of the World Bank Group, recently issued a loan of USD 50 million to Nairobi-based Diamond Trust Bank Kenya Limited (DTB Kenya). The targeted sectors include financial institutions, tourism, manufacturing and healthcare.

Manuel Moses, the IFC Country Manager for Kenya, stated, “IFC’s partnership with DTB Kenya is part of our strategy to help businesses in Kenya manage the impacts of COVID-19 so they can continue providing essential goods and services. IFC is committed to helping countries across Africa meet the unique challenges of COVID-19 and also speed the process of recovery.”

IFC is funding the loan through Working Capital Solutions, its program that provides one-year, renewable loans to banks to on-lend to SMEs for working capital and trade finance “in markets where macroeconomic factors have caused a reduction in the availability of US dollars.”

Founded in 1945, DTB Kenya is listed on the Nairobi Securities Exchange. Its top stakeholder is the Switzerland-based nonprofit Aga Khan Development Network, which owns 16.50 percent of the bank’s shares. As of March 2020, DTB Kenya held total assets of KES 385 billion (USD 3.5 billion). During 2019, it generated 1.8 percent return on assets and 12 percent return on equity through relationships with 600,000 customers. In addition to its operations in Kenya, DTB has subsidiaries in Burundi, Tanzania and Uganda.

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. As of 2019, it reported total assets of USD 94.3 billion.

By Daron Weber, Research Associate

Sources and Additional Resources

IFC press release on loan to DTB Kenya
https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/1f70cd9a07d692d685256ee1001cdd37/edf991ba89e1e4b3852585c200259589

IFC description of Working Capital Solutions
https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/financial+institutions/priorities/global+trade/working+capital+systemic+solutions

Diamond Trust Bank homepage
https://www.dtbafrica.com/

2019 Integrated Report and Financial Statements
https://dtbk.dtbafrica.com/sites/default/files/downloads/Intergrated%20report.pdf

DTB Kenya interim report, first quarter 2020
https://africanfinancials.com/document/ke-dtk-2020-ir-q1/

AKDN homepage
https://www.akdn.org

World Bank Group press release on response to COVID-19
https://www.worldbank.org/en/news/press-release/2020/03/17/world-bank-group-increases-covid-19-response-to-14-billion-to-help-sustain-economies-protect-jobs

Previous MicroCapital post on IFC
https://www.microcapital.org/microcapital-brief-ifc-lends-100m-to-procredit-holding-to-finance-small-medium-sized-enterprises-smes-in-eastern-southeastern-europe-ecuador/

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at www.microcapital.org/products-page/.