The Co-operative Bank of Kenya has partnered with the European Bank for Reconstruction and Development (EBRD) under a US$100 million financing programme aimed at expanding access to competitively priced foreign currency financing for Kenyan businesses.
The first tranche of US$50 million has been executed through a cross-currency swap transaction, marking the initial drawdown under the broader US$100 million facility agreed between the two institutions.
The transaction also marks the first cross-currency swap in Kenya to utilise the Kenya Shilling Overnight Interbank Average (KESONIA), the country’s benchmark reference rate.
According to Co-op Bank, the financing programme will increase its capacity to mobilise and provide long-term foreign currency funding to businesses, particularly those whose operations and revenues are linked to international markets.
The initiative is expected to benefit businesses in sectors including manufacturing, agriculture, agro-processing, horticulture, floriculture, logistics and tourism.
Businesses to Access Longer-Term Dollar Financing
Through the partnership, Co-op Bank customers are expected to gain improved access to foreign currency financing at competitive rates and with longer repayment periods.
The financing will also support trade finance and working capital requirements for exporters, as well as businesses participating in regional and global value chains.
The bank said the additional funding capacity will help businesses manage foreign exchange requirements associated with imports, exports and international contracts.
It will also support companies seeking to acquire machinery, equipment, technology and raw materials needed to expand and modernise their operations.
Co-op Bank Group Managing Director and Chief Executive Officer Dr Gideon Muriuki said the partnership would strengthen the bank’s ability to provide financing solutions to Kenyan enterprises.
“Our partnership with the EBRD under this US$100 million currency swap programme represents an important milestone in our commitment to supporting Kenyan businesses with innovative financing solutions,” Muriuki said.
He added that the first US$50 million tranche would enhance the bank’s capacity to provide long-term foreign currency financing while supporting business competitiveness, economic development and job creation.
EBRD Welcomes KESONIA Milestone
Abdessamad Abouti, Regional Head of Local-Currency Portfolio Management at the EBRD, described the transaction as an important milestone for Kenya’s financial markets.
Abouti said the EBRD had worked with local authorities and market participants to support the development of KESONIA.
He said the latest swap demonstrated how financial-market reforms could move from design to implementation.
The EBRD said the transaction reflects its broader commitment to supporting the development of local capital markets.
The US$100 million programme forms part of Co-op Bank’s efforts to support Kenya’s productive sectors and businesses that contribute to economic growth, employment creation and export earnings.
The bank said it will continue working with international financial institutions to expand access to funding for Kenyan enterprises, support international trade and investment, and provide financial solutions aimed at business and economic growth.