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Stanbic Bank to raise Sh13bn for startups in financing expansion bid
Stanbic Bank Kenya and South Sudan CEO Joshua Oigara speaks during the lenders 2023 full year financial results briefing held at Serena Hotel in Nairobi on March 6, 2024.
Stanbic Bank is looking to raise Sh12.9 billion over the 12 months to expand its financing of region’s growing start-ups which it says are grappling with gross underfunding due to the conventional design of mainstream banking.
Through the bank’s vehicle for extending patient capital, the Catalytic Fund, Stanbic looks to deploy the proceeds of the fundraising to businesses spread across agribusiness, manufacturing, creative arts, education and healthcare.
The target companies are those recording fast revenue growth or those in emerging businesses anchored on new products and/or services with strong potential for growth.
“We invest the Catalytic Fund in such businesses which are new start-ups or scalers. Kenya today has got just about five million scalers and our estimates show that out of those, less than a million have access to financing," Stanbic Bank CEO, Joshua Oigara, said on the sidelines of the launch of the third edition of the bank’s sustainability report in Nairobi.
“The way we have seen financing in that segment of the economy, the ambition is quite significant. We are in the market for $100 million (Sh12.9 billion) . We have learnt that if you keep just focusing on the businesses that are ready now, you are leaving 80.0 percent of the clients in the industry. We have to continue expanding the continuum by bringing such in."
According to disclosures made by the bank, Sh63 million was disbursed through the Catalytic Fund by way of grants in the year ended December 2024 with a total of Sh182.4 million having been disbursed since inception in 2020.
Stanbic Bank has now entered a partnership with the Gates Foundation which seeks to deepen the bank’s capacity for extending grants to scalers and start-ups in the medium-term.
“Initially, we provide them with a grant and then over time we give them access to market capabilities and bring in partners like Microsoft and GIZ as well as the work we are now doing with the Gates Foundation to be able to build strong capabilities. What excites me is that the repayment of this funding has been the highest at 80.0 percent," Mr Oigara said.
The bank says that whereas the energy sector presents an opportunity for the Catalytic Fund, the nature of financing required tends to demand different funding structuring.
“Energy projects tend to have the longest lead time from what we have seen, even 10 years. If you do short-term financing for energy projects, they don’t always come along...we've aligned with the biggest areas of the economy like agriculture because the model is similar but energy projects tend to have the longest lead time," Mr Oigara said.
