The Co-operative Bank of Kenya is struggling to recover part of Sh287.42 million loans it received from the Treasury for on-lending to government projects, according to the latest disclosures on the country’s debt status.
The bank, Kenya’s fourth-largest by market share, was among six privately-owned lenders which were listed by the Treasury for owing the State nearly Sh1.08 billion in on-lent loans at the end of June 2020.
Others were Equity Bank Kenya, whose outstanding loan stood at Sh493.47 million at the time, and four deposit-taking micro-financiers — Kenya Women Finance Trust (Sh100.56 million), Faulu Kenya (Sh98.15 million), SMEP (Sh49.40 million), and Rafiki (Sh46.40 million).
The latest annual debt report for the period ended June 2021 shows Co-op Bank did not service the loan in the year through June 2021, the only one amongst the six privately-owned financial institutions with on-lent credit from the Treasury.
“The Co-operative Bank of Kenya (Co-op) … (is) consistent in loan repayments, therefore reducing arrears. However, Co-op Bank has indicated that various co-operative societies are in a moribund state thereby rendering the inability to repay some of the on-lent loans,” the Treasury says in the annual debt report.
The report does not specify the government-based SACCOs which the Treasury borrowed funds on their behalf through Co-op Bank and which were now struggling to repay.
Government-based SACCOs controlled Sh233.38 billion, or 37.18 percent, of the Sh627.68 billion total assets held by the deposit-taking SACCOs sector last year, according to industry statistics.
The Treasury usually borrow funds from foreign and domestic lenders for on-lending to State-owned enterprises (SOEs) which cannot get funding on their own because of their weak financial positions but play a strategic role in the economy.
However, the Treasury is required to ensure the projects funded through on-lent credit “hold a top-level priority on the development agenda of the government”.
Nearly Sh44.26 billion or 4.8 percent of Sh921.93 billion on-lent loans are in the finance sector, the debt report shows.
About Sh125 million in on-lent loans to the sector was in arrears at the end of June.During the year under review, Equity Bank repaid Sh18.46 million on its on-lent facility, while Kenya’s largest micro-lender, KWFT, wired Sh44.75 million to the Treasury.Faulu Kenya repaid Sh43.68 million, SMEP (Sh22.23 million) and Rafiki Sh20.65 million.The five privately-owned financial institutions — which held Sh1.08 billion in on-lent loans from the Treasury at the end of June 2020 — repaid Sh149.77 million in the year ended June 2021.The […]