Tailoring Solutions for Small Businesses in Kenya
A loan provided by Co-op Bank helped Millicent Obati open a clothing store that now employs six sales assistants. © IFC
When a fire gutted Millicent Obati’s clothing stalls in Nairobi, her uninsured business went up in smoke. She had invested her life savings as well as her dreams in the business, and had no resources to help her rebuild. Then a friend told her about the Co-operative Bank of Kenya, an IFC investee. Once she shared her story, the bank agreed to provide a loan. It was the only financial institution that said yes, offering Obati a second chance at a livelihood.
“I was very discouraged going all over Nairobi asking for a loan to help me get back on my feet after the fire,” Obati remembered. “It was only when a friend took me to Co-op Bank that I finally found an institution willing to provide the financing I needed.” Today, Obati operates Midas Boutique, a successful, upscale clothing retailer in Nairobi that employs six sales assistants.
The IFC SME Banking Program recently committed to working with Co-op Bank to further expand financial services to the bank’s micro, small, and medium enterprise (SME) segment. In addition to a $105 million loan, IFC is advising Co-op Bank on how to scale up the advisory services it provides to SMEs, particularly underserved small enterprises such as Obati’s. This comprehensive engagement is expected to unlock an additional 24,000 loans to SMEs, of which 6,500 will target women entrepreneurs, turning Co-op Bank into a leader in the segment.
A Business Reborn
Kenya’s Co-op Bank has been an IFC client since 2012, when we invested $60 million. This was followed by a $5 million investment the next year from our Global Trade Finance Program, which extends and enhances the capacity of banks to deliver trade financing. As a strong relationship evolved, Co-op Bank became familiar with our innovative and tailored offerings. Ultimately, the bank selected us to help develop and deliver more targeted services to its SME clients—which had been identified as a strategic priority.
Co-op Bank is the second-largest bank in Kenya, with more than 13 million members. Its roots run deep: it was founded in 1968 as a cooperative society that would help provide access to affordable finance for the agricultural sector. Since its early days, the bank has expanded to become an institution that also targets the retail and business banking segments. Its focus is still on low-income segments.
IFC’s work with Co-op Bank will complement the bank’s ongoing efforts to support key sectors of the Kenyan economy: agribusiness, manufacturing, information and communications technology, and affordable housing. All are critical to job creation and economic development.
Banking with a Wide Reach
The IFC SME Banking Program assists banks across Sub-Saharan Africa to profitably establish and expand lending and other banking services to micro-, small-, and medium-sized businesses. The advisory services provided cover strategy, credit and risk management, staff training, sales and marketing product development, alternative delivery channels, and information technology.
Since its launch in 2007 as the Africa Micro, Small, and Medium Enterprise Finance Program, the SME Banking Program has supported 24 partner institutions across Africa and facilitated over $1 billion in loans to African SME clients.
Across the world, IFC’s Global SME Banking program advised clients through 61 projects in 35 countries in fiscal year 2016, totaling $52.2 million. About a fourth of the projects were targeted at lending to women business owners like Millicent Obati.
To learn more about IFC’s work with Financial Institutions, visit www.ifc.org/gfm
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Published in February 2017