Sidian Bank has signed an agreement with two US agencies to cover defaults on loans to healthcare sector SMEs worth 965 million shillings ($8 million).
The portfolio guarantee is offered by the United States International Development Finance Corporation (DFC) and the United States Agency for International Development (USAID). This is part of the lender’s efforts to bridge the funding gap facing the healthcare sector in Kenya.
The facility targets clinics, hospitals, pharmacies, personal protective equipment suppliers and diagnostic laboratories, covering any shortfall in their collateral when they borrow from Sidian Bank.
The lender said the facility will focus on SMEs that provide maternal and child health goods and services.
“Through the provision of collateral by the bank, our customers who lack collateral for credit facilities can access much needed credit,” said Sidian Bank CEO Chege Thumbi.
“I encourage all healthcare practitioners and service providers across the value chain to take advantage of this opportunity, thereby growing their businesses.”
Expanding access to commercial bank finance is critical to the growth of Kenya’s health sector, which has been chronically underfunded over the years.
USAID said it helped facilitate this guarantee to address the challenges that currently impede the growth of private sector health care, especially for underserved private providers.
“Working with the private sector is important to achieve sustainable health interventions and this partnership will provide additional financial resources to small and medium-sized private health care enterprises,” said John Kuehnle, director of the Office of Health, Population and Nutrition from USAID.
The facility will also help Sidian grow its SME and trade finance lending portfolio, which it hopes to leverage in the competitive banking sector which is dominated by large tier one lenders.
The bank is currently in the process of a change of ownership, following its majority owner Centum’s announcement in June that it was selling its 83.4% stake to major Nigerian lender Access Bank for 4.3 billion shillings.
Access Bank previously acquired a 99.98% stake in Transnational Bank in 2020 from close associates of former President Daniel Arap Moi in a deal valued at 1.56 billion shillings.
Access, which has assets of $25.5 billion, is focused on corporate retail banking and is expected to drive the growth of Sidian, which will be merged with Transnational Bank which has been rebranded Access Kenya.