Nurturing Small Businesses for Big Impact

IFC client Co-op Bank of Kenya is providing the financing needed for thousands of small enterprises to thrive. Photos: Nina Schwendemann/IFC

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When former street vendor Mercy Kimani remembers how much money it took to start her first small business, she laughs at her own nerve as a young entrepreneur.

“It was 3,000” Kenyan shillings, she recalls, almost aghast at the memory. “That’s 30 dollars! I was operating through overdraft.”

Today, Kimani’s Kenya-based plastic pipe manufacturing company, Peakplast Limited, and related family businesses turn over $2.5 million per year and employ 200 people. Kimani credits the Co-operative Bank of Kenya, an IFC client, with delivering her out of overdraft mode and onto a financial footing that positioned her enterprises for growth.

IFC’s SME Banking Program has been working with Co-op Bank for about seven years to expand financial services to clients like Kimani, who run micro, small, and medium enterprises (MSMEs). In addition to IFC’s most recent loan of $150 million to Co-op Bank in 2018, IFC advises officers on how to scale up lending to MSMEs, particularly underserved businesses with potential. This comprehensive engagement is expected to facilitate an additional 24,000 loans to these firms, of which 6,500 owned by women.

Mercy Kimani is the founder of Peakplast Limited. Her family businesses now employ 200 people.

A Business Reborn

Kenya’s Co-op Bank has been an IFC client since the first investment of $60 million in 2012. This was followed by a $5 million investment the next year from IFC’s Global Trade Finance Program, which extends and enhances the capacity of banks to deliver trade financing. The bank later selected IFC to help develop and deliver more targeted services to its MSME clients—including female entrepreneurs—who are a strategic priority.

Co-op Bank, which has more than 13 million members, is the second-largest bank in Kenya. It was founded in 1968 as a cooperative society to 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 remains on its low-income clients.

IFC’s work with Co-op Bank complements the bank’s ongoing efforts to support key areas of the Kenyan economy: agribusiness, manufacturing, information and communications technology, and affordable housing. Agriculture is the major component of Kenya’s economy, contributing to around a quarter of GDP. The country is also home to booming high-tech and service industries, but lack of infrastructure hampers efforts to improve its economic growth, which could help reduce poverty and unemployment.

Banking with a Wide Reach

IFC’s SME Banking Program assists banks in emerging markets worldwide, including those in sub-Saharan Africa, to profitably establish and expand lending and other banking services to micro-, small-, and medium-sized businesses. We also collaborate with banks through the Banking on Women program, with a focus on supporting women entrepreneurs. The advisory services cover strategy, product development, credit and risk management, staff training, sales and marketing expertise, alternative delivery channels, supply-chain finance, agri-finance, and information technology.

In 2017, IFC’s global financial clients provided nearly $365 billion in SME loans. About a fourth of the projects were targeted at lending to women entrepreneurs like Mercy Kimani—who plans to pass down to the next generation her hard-earned lessons in business.

“It was always my dream to go into manufacturing,” she says. “After I retire, my son and daughter will continue. I’m mentoring them.”

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Published in April 2019

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Across the world, our investments and advice help the private sector create jobs, improve basic services, foster small enterprises, and more. These stories demonstrate how IFC clients are making a difference in people’s lives.