Co-op Bank uses 1 billion shillings loan to boost farming business

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Co-op Bank uses 1 billion shillings loan to boost farming business


Co-op Bank MD Gideon Muriuki. FILE PHOTO | NMG

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summary

  • The lender said on Thursday it had received the subordinated loan from the Eco Business Fund and would extend it to sustainable agro-industries, such as coffee and tea.
  • The facility marks the first investment in Kenya for the Green Business Fund, which specializes in promoting the use of natural resources and in climate change mitigation and adaptation.

Co-operative Bank of Kenya #ticker: COOP received a loan of 1.1 billion shillings ($ 10 million) from a Luxembourg-based impact investment fund to on-lend to agribusinesses.

The lender said on Thursday it had received the subordinated loan from the Eco Business Fund and would extend it to sustainable agro-industries, such as coffee and tea.

The facility marks the first investment in Kenya for the Green Business Fund, which specializes in promoting the use of natural resources and in climate change mitigation and adaptation.

Co-op Bank chief executive Gideon Muriuki said in a statement that the loan would provide much-needed financing for farming businesses, especially in light of the Covid-19 challenges many businesses face.

“This new partnership with eco.business Fund, which makes $ 10 million available for on-lending to farmers, is a winner on many fronts,” said Mr. Muriuki.

“It provides structured finance to adapt to agriculture financing cycles, and also comes with support mechanisms to help farmers make a successful pivot to sustainable and climate-smart agriculture.”

Agriculture accounts for about a third of Kenya’s gross domestic product, but commercial loans to this sector remain low and limit the ability of producers and processors to invest in sustainable production practices.

The chairman of the board of the eco.business fund, Jens Mackensen, said the deal aims to promote green finance.

“We are delighted with our first investment in Kenya. This new partnership with Co-op promises to be fruitful as the bank is well positioned to act as a catalyst for sustainable production practices, ”said Mr. Mackensen.

Mr. Mackensen.

The fund supports sustainable operations in the agriculture, fisheries, forestry and tourism sectors and targets companies that hold sustainability certification or are looking for loans to make sustainable investments.

The loan is expected to increase Co-op’s loan portfolio which is classified as green portfolio from the current Sh3.4 billion.

Co-op is among the leading lenders in Kenya increasingly focusing on sustainable finance based on environmental and social governance (ESG) practices.

The lender has adopted the IFC Exclusion List which defines the types of projects such as trading in radioactive materials that the entity does not finance.


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Juana Renfrow

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