Project Detail |
The project entails a USD 70 Million Integrated Facility (Facility) consisting of: (i) aTrade Finance Transaction Guarantee (TG) Facility that will allow the Bank to provide up to 100% guarantee to Confirming Banks (CBs) for the non-payment risk arising from the confirmation of Letters of Credit, and similar trade finance instruments issued by Diamond Trust Bank Kenya limited: (ii) USD 10 million blended line of credit (LoC) (USD 5 million SEFA concessional loan and USD 5 million ADB loan) to support it augment its green lending portfolio through affordable finance for Energy Efficiency (EE) and Renewable Energy (RE) technologies The LoC financing is ring-fenced to the targeted sub-sectors and eligibility criteria (iii) Technical assistance (TA) support to DTB-K and project developers curated to maximize the bankability of pipeline projects, reduce technical barriers, and build DTBs capacity to invest in RE and EE projects. SEFA-funded TA and concessional finance and will support DTB-K in rolling-out green financial products and support the industry’s transition to clean energy. Specifically, the Borrower is targeting to grow its lending to green projects to 20% of its loan book by 2030. The above instruments will complement each other e.g. the TG will complement the LOC by supporting the import of inputs used in the energy sector which are procured by letters of credit. Project Objectives To support the Borrower in growing itslending to green projects (from ca 6.9 % in 2023 to 20% of its loan book by 2030), the Bank is requested to provide it with a USD 10 million blended line of credit (USD 5 million SEFA concessional loan and USD 5 million ADB loan) to support its local lending to RE and EE investments in the residential, commercial, and industrial sectors. This is complemented with technical assistance support to DTB-K and project developers to facilitate the origination, appraisal and implementation of the projects. Beneficiaries The development outcome of the TG instrument has been rated as Very Good and Positive for additionality. The TG will enhance Private sector development through the provision of support to the Kenyan financial sector given that the TG would enable the scaling up of trade finance activities of DTB-K. This facility will support intra-Africa trade, and the regional trade (EAC), thus directly contributing to the successful implementation of the AfCFTA agenda. It will also provide support to SMEs and local corporates to facilitate theirimport and export business while generating more tax revenue through import duties in Kenya. The LoC and TA will support companies competitiveness and transition to clean energy, catalyzing additional private sector financing for renewable energy, delivery of about 11MW of additional capacity and about 108,267 tCO2eqinemission reductions. |