NIC Bank Given Sh500 Million Loan

NIC Bank yesterday received a $7 million (Sh500 million) loan for long-term lending to exporters.

This is the third line of credit the bank has received from Proparco, the private arm of AFP, a French development agency.

It brings to $22 million (Sh1.6 billion) the total the bank has received since 1999. Others are $10 million (Sh720 million) in 1999 and $5 million (Sh360 million) two years ago.

During the signing of the pact in Nairobi, NIC managing director James Macharia said the loan would boost the bank's capacity to support long-term foreign currency lending to export firms.

"The credit line will bridge the funding gap of medium and long-term borrowers that require financing in dollars and euros to reduce foreign exchange risks," he said, adding that it was a confirmation of the success of the past credit funds from the agency.

Among expected borrowers are flower and manufacturing firms.

Mr Macharia said the demand for lending in foreign currency by export firms was rising despite the strengthening of the shilling to reduce the foreign currency risks.

The firms, he said, had increased their borrowing to boost their export capacity with the picking up of the economy.

"The firms have increased their exports by between 15 per cent and 20 per cent since 2003, and are always coming back to say the funding is not enough," he added.

Proparco managing director Luc Rigouzzo said the firm had advanced $200 million (Sh15.4 billion) to East African countries, with most of the funds going to Kenya.

The support for the private sector, he said, had benefited the financial and services sectors as well as manufacturing and agribusiness.

He said his firm would in future support private companies involved in infrastructure projects in collaboration with other direct foreign investors.

NIC board chairman James Ndegwa said local banks lacked domestic savings to sustain the current economic growth momentum, hence the need to seek funds from foreign sources.