The DEG loan to Co-operative Bank of Kenya is the first to use a guarantee from the European Fund for Sustainable Development Plus.
DEG, the German development finance institution, is providing Co-operative Bank of Kenya with a long-term loan of $25m (€23.3m), which will exclusively fund micro, small and medium-sized enterprises (MSMEs) which are run or owned by women.
The DEG financing is the first to use a guarantee from the European Fund for Sustainable Development Plus (EFSD+), which secures a partial amount of the loan.
As part of the European Union’s Global Gateway Initiative, created by the EU to invest in infrastructure projects worldwide, the EFSD+ aims to intensify cooperation with the private sector and enable projects that are particularly relevant to development policy. The credit line will help close the financing gap for MSMEs in the local credit market in Kenya.
Closing the trillion-dollar gender finance gap
Africa has one of the highest proportions of women entrepreneurs in the world, with OECD research revealing that more than a quarter of all businesses were either started or are run by women. However, despite this, African women entrepreneurs are often overlooked when it comes to funding, creating an even wider gender gap.
Currently the finance gap for women-led businesses in Kenya is $2.6bn, according to SME Finance Forum data.
Monika Beck, member of the management board of DEG said: “The current investment is an important contribution to supporting SMEs in developing countries in general and SMEs run by women in particular.”
Gideon Muriuki, managing director and CEO of Co-operative Bank Group, added: “The financing from DEG comes at exactly the right time, since there is a great need for stronger backing of businesses that are owned or managed by women. Furthermore, the facility will boost the Bank’s capacity to cover the long-term funding requirements of SMEs.”
The current transaction contributes to the UN Sustainable Development Goals 8 and 5, of Decent Work and Economic Growth and Gender Equality.
