Family Bank gets $20m from BII to boost MSME trade

Family Bank has signed a KSh 2.6 billion ($20 million) agreement with British International Investment (BII), the UK’s development finance institution, to enhance trade financing for micro, small, and medium-sized enterprises (MSMEs) in Kenya.

The partnership aims to address liquidity challenges faced by MSMEs, with at least 50% of the funds dedicated to women-led businesses and agribusinesses involved in production, processing, logistics, and infrastructure.

Family Bank CEO Nancy Njau emphasized the deal’s alignment with the bank’s five-year strategy to scale SME lending. “With SMEs comprising over 80% of our customer base, this partnership enables innovative, cost-effective solutions to bridge financing gaps, particularly for women-led and trade-focused businesses,” Njau said.

A Central Bank of Kenya (CBK) survey highlights MSMEs’ critical role, constituting 98% of businesses, creating 30% of jobs annually, and contributing 3% to GDP.

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Seema Dhanani, BII’s Regional Director for East Africa, noted the partnership’s focus on supporting youth, women, and vulnerable groups.

“MSMEs are vital to Kenya’s economy. This collaboration with Family Bank strengthens trade and working capital finance for agri-focused and women-led businesses, driving economic and social transformation,” she said.

The deal follows BII’s recent $100 million (KSh 12.9 billion) investments in KCB and Standard Chartered Bank for similar MSME and women-focused lending initiatives. Despite their economic importance, MSMEs face significant financing hurdles, exacerbated by high interest rates.

CBK data shows Kenyan banks earned an additional KSh 12.7 billion from MSME lending in 2024 compared to 2022, largely due to rising rates, increasing loan servicing costs for small businesses.