NAIROBI, Kenya — Co-operative Bank of Kenya and the European Bank for Reconstruction and Development (EBRD) have entered into a US$100 million (about Sh13 billion) financing programme aimed at expanding access to foreign-currency funding for Kenyan businesses.
The programme will support companies operating in sectors linked to international markets, including manufacturing, agriculture, agro-processing and businesses involved in regional and global value chains.
The EBRD said the first US$50 million (about Sh6.5 billion) tranche has been completed through a cross-currency swap with Co-op Bank.
First KESONIA-Based Cross-Currency Swap
The transaction is significant for Kenya’s financial markets because it is the first cross-currency swap to use the Kenya Shilling Overnight Interbank Average (KESONIA) as a reference rate.
The EBRD said the US$50 million transaction is also the first drawdown under the wider US$100 million programme agreed with Co-op Bank.
KESONIA is a transaction-based benchmark calculated from overnight interbank lending rates in Kenyan shillings and published by the Central Bank of Kenya.
The benchmark is part of reforms aimed at improving transparency, reliability and confidence in Kenya’s domestic financial markets.
How the Financing Will Work
Under the cross-currency swap, the EBRD provides US dollars to Co-op Bank and receives Kenyan shillings in return.
The arrangement enables the bank to access dollar funding without having to purchase the currency directly in the open market, supporting longer-term lending to businesses with foreign-currency requirements.
Co-op Bank said the broader programme will increase its capacity to offer businesses dollar-denominated loans at competitive rates and with longer repayment periods.
The facility will also support trade finance and working capital requirements for exporters and companies participating in regional and global supply chains.
Businesses to Benefit
The financing is expected to benefit businesses whose operations expose them to foreign-currency requirements arising from imports, exports and international contracts.
Manufacturers, agricultural businesses and agro-processors are among the sectors targeted by the programme.
Companies operating in international markets can also use the financing to manage their foreign-currency needs while accessing longer-term funding.
The facility is therefore expected to expand the range of financing options available to businesses that require dollar funding for their operations.
Muriuki: Facility Will Boost Business Financing
Co-op Bank Group Managing Director and CEO Gideon Muriuki said the first tranche would strengthen the lender’s ability to provide long-term foreign-currency financing.
“The first US$50 million tranche enhances our ability to provide long-term, competitively priced foreign currency financing to help businesses strengthen their competitiveness while contributing to Kenya’s economic development and job creation,” Muriuki said.
The bank said the facility would particularly support businesses seeking to strengthen their participation in regional and international markets.
EBRD Highlights Local Capital Markets
EBRD Regional Head of Local-Currency Portfolio Management Abdessamad Abouti said the transaction demonstrates how Kenya’s financial-market reforms can be applied in actual market transactions.
“This is an important milestone for Kenya’s financial markets,” Abouti said, adding that the swap demonstrates how reforms surrounding KESONIA can move from design to implementation.
The EBRD said the transaction could help build confidence in KESONIA, encourage wider use of the benchmark and support the development of Kenya’s local financial markets.
KESONIA Gains Wider Market Role
The transaction comes as KESONIA becomes increasingly embedded in Kenya’s financial system.
The Central Bank of Kenya began publishing KESONIA and the KESONIA Compounded Index in September 2025 as part of the country’s transition towards internationally recognised benchmark practices.
The CBK describes KESONIA as a risk-free reference rate based on unsecured overnight interbank transactions in Kenyan shillings.
The EBRD-Co-op Bank transaction gives the benchmark an additional role in a cross-currency financing arrangement, marking a significant step in the development of Kenya’s local-currency financial market.
The wider US$100 million programme will now provide Co-op Bank with additional capacity to finance Kenyan businesses with foreign-currency requirements.
