The European Investment Bank (EIB) will contribute USD 5 million to the Business Partners International Kenya SME Fund (BPI-K). BPI-K is a Kenyan Limited Partnership that invests in young Kenyan SMEs focusing particularly on small companies and investing between USD50,000 and USD500,000 per company. The fund is co-sponsored by IFC and Business Partners International (BPI), a subsidiary of Business Partners Ltd (BPSA), a South African SME investment specialist. Other investors in the fund, which is targeting a total size of USD15m, include IFC, CDC Group plc, Trans-Century Ltd and the East African Development Bank.
With active support from BPSA, BPI-K will be managed by an experienced Kenyan team, and aims to build on the successes of Business Partners Ltd, which has operated in South Africa since 1981. It is the second fund raised by Business Partners International (BPI) following the successful launch of the BPI Madagascar fund, also supported by the EIB. The BPI model will make use of investment instruments developed by BPSA specifically for the SME sector, which are primarily debt and quasi-equity based. In addition to access to capital, BPI-K investee companies will have access to a USD 2.5m technical assistance fund that will be used to enhance their operations.
The EIB's investment in BPI-K provides further support to the initiative to extend the BPI funding model into new countries on the African continent and to support the growth of SMEs, a key objective of the European Investment Bank's mandate under the Cotonou Agreement. The combination of experienced local investment executives and the highly adapted BPI model should provide a welcome boost to a sector that remains underserved in Kenya and the rest of Africa. The Fund will also benefit from the support and involvement of the EIB's regional representation in Nairobi.
The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects that further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries that have co-operation or association agreements with the Union.
Financing in Africa, the Caribbean and the Pacific (ACP) is carried out under the provisions of the Investment Facility, set up by the ACP-EU Partnership Agreement, signed in Cotonou in June 2000. Under the Cotonou agreement the total financial aid available amounts to EUR 15.2 billion for 2002-2006, of which EUR 11.3 billion is grant aid from the EU member states, EUR 2.2 billion is managed by the EIB under the Investment Facility and up to EUR 1.7 billion is in the form of loans from the EIB's own resources. The Investment Facility is a revolving facility (loan amortizations will be invested in new operations), aiming at supporting technically, environmentally, financially and economically sound projects in the private or the commercially run public sector.