Diamond Trust Bank Kenya (DTB) has secured a KSh5.41 billion ($50 million) loan from the International Finance Corporation to help cushion micro, small and medium sized enterprises from the economic shocks caused by the spread of COVID-19.

The loan, is part of IFC’s $8 billion package set aside early this year to support SMEs who have been hardest hit by the pandemic, stripping their ability to secure loans from financial institutions.

The facility will allow DTB to maintain lending to help the future viability of small businesses.

“As an SME bank, we are aware that these businesses are among the hardest hit by the fall-out of the pandemic. This facility will enable us to support SMEs to address their cash flow challenges, which is a key concern as businesses need easy access to short-term liquidity,” said Nasim Devji, Group CEO and Managing Director DTB, in a statement.

“We urge our SME borrowers to take advantage of the facility to ensure their survival during these tough times, as we remain committed to their development,” she said.

The IFC fund will finance small businesses directly affected by the pandemic, struggling with disruptions in supply chains, and support them to continue with their operations.

This is one of the solutions needed to give SMEs the lifeline they need to survive and contribute to the economy.

According to a 2016 Kenya National Bureau of Statistics Micro, Small and Medium Establishment (MSME) Survey, majority of MSMEs work in the service sector, with most operating in wholesale and retail trade, repair of motor vehicles and motor cycles followed by accommodation and food service activities.

The report continues to say that in 2015, MSMEs contributed KSh3, 371.7 billion against a national output of KSh9, 971.4 which represented 33.8 per cent.

“In terms of gross value added, the MSME are estimated to have contributed KSh1,780.0 billion compared to KSh5,668.2 billion for the whole economy,” the report states.

Globally, MSMEs represent more than 70 per cent of employment and 50 per cent of GDP.

Last month, Equity Bank also got a KSh5 billion loan to support small businesses affected by the economic downturn caused by COVID-19.

IFC had initially set aside a $6 billion package to help sustain livelihoods in developing countries but later increased it to $8 billion.

The additional $2 billion will provide funding to banks in emerging markets to loan to SMEs.