$2 million to explore utilisation of pension funds in Kenya project funding

IFC in KES210-million business financing advisory project

According to a release in the Business Daily, the International Finance Corporation (IFC) has provided $2 million (KES210-million) to "fund the development of new financing products for private companies in Kenya."

The "Joint Capital Market Development Programme" (J-CAP) will work to mobilise resources from "major pension funds to offer loans denominated in the local currency."

According to a release by the IFC: “The project aims to develop and enable the use of capital markets to mobilise long-term financing for key sectors, with a focus on housing and infrastructure, by combining public and private sector operations to introduce new products and instruments for a sustainable economic growth.”

It is anticipated that potential long-term debt products will be regulated by the Capital Markets Authority.

The IFC and the World Bank anticipate this programme being rolled out in several other countries. If successful, it could create a new way of funding private companies that rely heavily on bank loans. Most bank loans have a short to medium term maturity, making it difficult for companies seeking credit with longer lifespans.

The advisory project is expected to run until 31 October 2020.