Kenya Commercial Bank II The proposed engagement with Kenya Commercial Bank Limited (KCB or the Group) is aligned to IFCs strategy for the East African financial sector. The Project is comprised of two related investments namely, a $100 million senior loan facility to KCB ,  one of largest and systemically important banks in Kenya and the East Africa region and a $5 million equivalent senior loan, in Rwanda Francs for KCBs wholly owned subsidiary KCB Rwanda Limited (KCBR). The Project is expected to provide the Bank with significant long-term financing support of its strategic objectives. 

The funding will be used to support the Groups regional expansion, increase access to finance for crucial sectors of the economy such as SMEs, and facilitate increased mortgage lending especially for affordable housing. The use of proceeds will also reach the Banks subsidiaries in the East Africa region and hence increase IFC reach in IDA countries. 

The senior loan facility to KCBR will be sourced through IFCs recently signed swap agreement with the National Bank of Rwanda (NBR), and will  boost its long term funding base and allow it to increase mortgage lending for affordable housing. The investment for this project will be coupled with IFCs mortgage toolkit technical Assistance to strengthen the Banks mortgage finance business. i) Support Lending and Growth in the East African Market: 
The East African banking sector was affected by the global financial crisis, which led to a slowdown in the economy and reduced lending by the banking sector. Now that the situation has stabilized, KCB is well positioned to increase lending in the local market, which is important for investment and economic recovery in the region. The Project will, therefore, support the resumption of lending by KCB ultimately supporting renewed economic activity.

(ii) Increased Access to Finance for SMEs: 
SME's are a key growth sector for KCB. IFC will assist with SME development beyond financing to include advisory services for key aspects of its SME operations. The expected improvement in access to finance for SMEs will help to generate employment at the grass roots level and further facilitate regional trade which is expected to grow rapidly following the economic integration of the East African Community.

(iii) The investment in KCB Rwanda will have high development impact.  On an institutional level, access to longer term local currency financing will help KCBR manage its liquidity more effectively by limiting foreign currency risk.  On a sector level, the introduction of longer term financing in the market will afford more options to SME's and individual borrowers by providing longer term financing for mortgages and other new products.  In addition, the proposed technical assistance program will build the Bank's capacity in mortgage origination and monitoring in line with global best practice.

(iv) Support regional Expansion and integration
IFC's engagement with KCB and the support for its regional expansion strategy will encourage other banks to follow suit, which improves the level of competition and service in the regional banking sector. This with strengthen the regional economy and contribute to the success of the newly created economic community.