MICROCAPITAL STORY: K-Rep Bank of Kenya Receives $2.2m Microfinance Investment from the African Development Bank (AfDB)

K-Rep Bank, a commercial bank that directly targets low income clients in Kenya, received a Kshs 174.8 million (USD 2.2 million) investment from the African Development Bank (AfDB) during May 2009. This financial support will also include technical assistance related to capacity building. K-Rep Bank provides various banking services and specializes in loans to low income, small and micro entrepreneurs. K-rep plans to create 10,000 new jobs by 2011 of which 55 percent would involve women entrepreneurs.

As at the end of 2007 K-Rep had over 153,000 active borrowers of which 64 percent were women. The average loan balance was USD 529. The gross Loan Portfolio was USD 81.5 million with Total Assets of USD 110.5 million, as reported to the MIX Market, the microfinance information clearing house. K-Rep had a Return on Assets of 2.2 percent and a Debt to Equity Ratio of 592 percent.

In November 2008 a MicroCapital story reported that K-Rep announced a USD 2.6 million loss for the nine months to September 2008 and received an injection of capital of USD 12.7 million from shareholders. By the end of 2008 the loss for the year was USD 4.4 million and MicroCapital reported that a new Chief Operations Advisor, Gerard Monteiro, had been appointed. Gerard Monteiro, a 33-year veteran of the banking and microfinance sector in Africa and the Middle East, is looking to cut costs and examine the current structure of the organization.

K-Rep Bank was established in 2000 and was the first commercial bank to directly target low-income clients. Previously it was an intermediary organization providing funds to non-governmental organizations (NGOs) for microfinance. In 1987 K-Rep expanded to work on USAID’s Private Enterprise Development Project and in 1997 K-Rep Bank Limited was formed as a subsidiary of K-Rep Group, a Kenyan development agency involved in microfinance. Its current shareholders are K-Rep Group (25 percent), International Finance Corporation (16.7 percent), the African Development Bank (15.1 percent), Triodos (11 percent), Kwa (ESOP) (10 percent), ShoreCap International (8.2 percent), Founding Members (5.2 percent), The Netherlands Dev. Finance Co. (FMO) (5 percent) and ICDC-I (Public Investment Company) (3.8 percent).

The African Development Bank (AfDB) was established in 1964 as a regional multilateral development bank to support economic and social development in the African region through loans, equity investments and technical assistance. Based out of Abidjan, Côte d’Ivoire, its shareholders include 53 African countries and 24 non-African countries from Asia, Europe, North America and Latin America. In March, MicroCapital reported that the AfDB would double its lending in 2009 to USD 11 billion due to the financial crisis.

By Sally Levy, Research Assistant

Additional Resources:

AllAfrica Press Release: African Development Bank Supports K-Rep Bank – Invest Kshs 174.8 Million (U.S.$ 2.2 Million) to Promote Entrepreneurship and Economic Growth in Kenya

K-Rep Bank: Home

African Development Bank: Home

MicroCapital Story: Kenya’s K-Rep Bank Records Loss in Profits, Receives New Capital from IFC, African Development Bank, Shorecap International, Triodos, FMO, K-Rep Group

MicroCapital Story: African Development Bank (AfDB) Warns Microcredit in the African region is Dwindling; AfDB To Double Annual Lending to USD 11 Billion to Help Countries Deal with the Global Downturn

MicroCapital Story: Kenya’s K-Rep Bank Brings in New Manager as a Response to $4.4m Loss in 2008

MIX Market: K-Rep