IFC, a member of the world Bank Group, has entered into a US$ 5million (Kshs 395 million) guarantee agreement with Diamond Trust Bank Kenya (DTB) to support its trade finance activities, the two organizations announced today.
The guarantee by IFC will contribute towards the volume of Trade Finance instruments issued by DTB to finance imports to Kenya, Uganda, Tanzania and Burundi.
According to DTB Group Chairman Mr. Mahmood Manji, the collaboration will enable DTB Kenya to increase its trade finance activities, helping more local East African Companies grow and compete in the International market place.
IFC’s trade finance program promotes trade with emerging markets worldwide by supporting flows of goods and services to and from developing countries. Through the program, IFC provides guarantee coverage of bank risk in emerging markets, allwing recipients to expand their trade finance transactions within an extensive network of countire and banks and to enhance their trade finance coverage.
This is the second time in less than a year that IFC and DTB Kenya have entered into a collaborative arrangement. This follows last year’s kshs 2 billion financing package availed by IFC to DTBto support the bank’s expansion plans and to enable it increase lending to small and medium enterprises.
DTB plans to increase its branch network from the current 30 to 100 in the next three years. This year alone, the group intends to open nearly 20 new branches including Bungoma, Kitale, kakamega, Kericho, Buru Buru, Diani in Kenya, and plans are underway to open a branch in Zanzibar as well as other parts of Tanzania. The group will also open a new subsidiary in Burundi in the next two months as it considers venturing into Madagascar, Mozambique, DRC congo and Rwanda.
IFC has been a shareholder in DTB since 1983 and holds a 9.85 per cent stake in the bank.