The International Finance Corporation (IFC) has extended USD 150.0 million (Kshs 18.0 billion) to KCB Group to support businesses in tackling the effects of climate change.
The loan is a senior unsecured loan with a maturity of 7 years and a grace period of 2 years.
This is the third facility from IFC following a 10-year USD 150.0 mn and a 7-year USD 75.0 million extended to KCB Group in 2020 and 2018, respectively, to scale-up lending to Micro, Small and Medium Enterprises (MSME).
This makes KCB Group the biggest borrower from IFC among tier one Kenyan lenders, with a cumulative amount of USD 375.0 million (Kshs 45.0 billion).
Upon disbursement, the credit facility is expected to provide the Group with a solid financial capacity to lend to MSMEs and support climate finance transactions.
“We continue to play our role in climate mitigation and adaptation in Kenya in the realization that business is no longer just about profits, but ensuring that we also take care of our environment,” said KCB Group Chief Executive Officer Paul Russo.
“KCB is stepping in to help businesses curtail the adverse impacts of climate change, thus boosting economic growth, food security, and job creation in Kenya and building resilience.”
As at H1’2022, KCB Group’s Group’s green lending as a percentage of its loan portfolio stood at 11.7%, with the Group keen to align to global best practices and Environment Social and Corporate Governance standards.
“Going forward, we expect the Kenyan Banking sector to continue incorporating climate-related risk management as the Central Bank of Kenya (CBK) continues to enforce the Guidance on Climate-Related Risk Management rolled out in 2021,” Cytonn Investments notes.
The guidelines aim to guide financial institutions to integrate the risks and opportunities from climate change in their risk management, strategy and governance structure.
A 2019 IFC report estimated that Nairobi has an $8.5 billion climate investment opportunity for the period 2018 to 2030—$5 billion of which lies in electric vehicles and the rest in public transport, green buildings, water, renewable energy, and waste.
