Sidian Bank gets Sh1b capital for lending to small businesses

Micro, small and medium-sized enterprises (MSMEs) will be able to get over Sh100 million in long-term loans following the injection of a Sh1.1 billion long-term facility into Sidian Bank.

The facility from Switzerland-based EMF Microfinance Fund (EMF) will facilitate on-lending to MSMEs and also boost the bank’s regulatory capital.

The mid-tier bank will also offer lending at lower interest rates, according to Sidian Bank Chief Executive Chege Thumbi. Microfinance enterprises will be able to borrow as low as Sh100,000.

Mr Thumbi said interest rates for those seeking both funded and non-funded loans will range between 15.5 and 19 per cent, subject to one’s credit score.

“When a customer wants to execute a project, irrespective of whether they are supporting contracts from government, parastatals, counties or even the private sector in the agriculture sector, we structure financial solutions depending on the need of each and every customer,” he said.

“In terms of the interest rate, we’ve got Central Bank of Kenya (CBK) approval to adopt the risk-based pricing model and each customer who we are supporting would then attract their own interest rates depending on the profile they have.”

According to CBK’s risk-based pricing, the interest rate ranges between 15 and 19 per cent.  Sidian has attracted interest from development finance institutions and international partners keen on the growth of the MSME sector, according to the CEO. As a result, the bank has grown to over 43 branches countrywide.

Chuck Olson, Managing Partner at Enabling Qapital, a Swiss-based impact investment advisory firm which advises EMF, said they have plans of extending the same facility to other financial institutions.