After the merger, the state authority plans new loans totaling ATS 12.6 billion

capital markets

After the merger, the state authority plans new loans totaling ATS 12.6 billion


Christopher Huka, Director General of Kenya Development Corporation (KDC). PHOTO | SWIMMING POOL

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summary

  • The government-backed DFI inherited a loan book of about Shillings 4.5 billion from ICDC, TFC and IDB Capital, which the Treasury eventually collapsed into a single entity late last year after more than seven years of reforms.
  • In its three-year strategic plan to 2024, the state financier aims to spend Sh8.64 billion this fiscal year, nearly doubling to Sh16.31 billion in the year as of July.
  • The company estimates that its total assets will close this June at Sh36.19 billion and surpass Sh50 billion by the end of June 2024.

Kenya Development Corporation expects its loan pipeline to reach Sh12.6 billion in the first year of the merger of state-backed development finance institutions, more than double the loan book it inherited from the three defunct firms.

KDC – the offshoot of a merger of Industrial and Commercial Development Corporation (ICDC), Tourism Finance Corporation (TFC) and Industrial Development Bank Capital Ltd – says it had Sh10.6 billion in its pipeline at various stages of assessment by the end of February.

The government-backed DFI inherited a loan book of about Shillings 4.5 billion from ICDC, TFC and IDB Capital, which the Treasury eventually collapsed into a single entity late last year after more than seven years of reforms.

“It takes a long time for the projects to really say, ‘We’re paying out’ at this point. Project lifecycles are long. Some projects coming into the pipeline this fiscal year will complete their assessments and project reviews by the end of next fiscal year,” said Christopher Huka, interim general manager of KDC.

In its three-year strategic plan to 2024, the state financier aims to spend Sh8.64 billion this fiscal year, nearly doubling to Sh16.31 billion in the year as of July.

“We didn’t want to have a conservative goal in our strategic plan. Based on our assets, we said, “We should be able to sweat these assets to project this kind of growth,” Mr. Huka said.

“We will push these numbers. This fiscal year [ending June] gave us a base from which to say what we want to focus on.”

The company estimates that its total assets will close this June at Sh36.19 billion and surpass Sh50 billion by the end of June 2024.

KDC has targeted new opportunities in renewable energy, post-harvest management systems, the livestock value chain and the blue economy — sectors it says have not been fully exploited by the defunct DFIs — to expand its asset book.

ICDC, whose existence dates back to before independence in 1954, was established primarily to fund Kenya’s industrialization dream and high potential sectors that support economic growth by providing affordable debt and equity financing.

On the other hand, TFC was founded in 1965 to provide affordable long-term development finance and advisory services for investments in the tourism industry, while IDB Capital was founded in 1973 to help medium and large companies establish and expand through competitive financing.

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