Equity Bank Kenya and FMO-NASIRA sign guarantee program for COVID-19 support
In March Equity Bank Kenya (EBK) announced its partnership with the Netherlands FMO development bank with the signing of a NASIRA loan portfolio guarantee facility. This USD 50 million (KShs 5.5 billion) facility is the second NASIRA guarantee signed with EBK with the support of EU funding.
With the funding Equity Bank Kenya will further support Kenyan entrepreneurs during these challenging times with a special focus on micro, small and medium enterprises (MSMEs). The FMO funding will provide a NASIRA loan portfolio guarantee covering loans provided to MSMEs affected by the COVID-19 crisis, including women and young entrepreneurs and companies in the agri-value chain. The guarantee mitigates Equity’s risk in the MSME segment which has heavily borne the brunt of the COVID-19 pandemic.
On signing the agreement Dr James Mwangi, Equity Group MD and CEO said, “Equity is committed to continue supporting businesses to survive, recover and thrive post COVID-19 pandemic to protect lives and livelihoods. MSMEs are key players in driving the growth of the economy and this support in form of guarantee from our partners, FMO, will mitigate the risk Equity is exposed to as we continue to work with MSMEs to navigate through these uncertain times. Some MSMEs require more funding as they repurpose their businesses while others require accommodation in loan repayments. This facility among others that Equity has signed will assist us to support MSMEs and keep the lights of the economy on as we look forward to the economy bouncing back with the development and rollout of the vaccine.”
The NASIRA guarantee will be complemented with a bespoke Capacity Development project aimed at supporting EBK’s offering towards companies and smallholder farmers in the agricultural value chains with a target to grow the Agriculture segment of Equity’s loan book to 30%. The technical assistance will help in strengthening EBK’s value proposition regarding financial and non-financial products and services for these customer segments.
Linda Broekhuizen, CEO (a.i.) of FMO stated, “We are very happy to be able to support Equity Bank Kenya in weathering the COVID-19 storm. Funding for MSMEs is essential in lessening the impact of the pandemic on people’s livelihood and their communities. Together with the Capacity Development project we are confident small entrepreneurs will get much needed support.’’
“The NASIRA guarantee is part of the EU External Investment Plan. By investing €4.6 billion in EU funds, an additional €47 billion in total investment will be leveraged globally from the public and private sector. It will enable small business owners to access affordable loans through local banks, microfinance institutions and other non-banking financial institutions”, underlined the EU Ambassador to Kenya, Simon Mordue.
“The guarantee supports Equity to mitigate and reduce risk in the MSME segment especially emanating from the pandemic that has slowed and reduced economic activity. The Bank’s NPLs has traditionally been 40% lower than the industry. As we seek to build back better without leaving anyone behind, we will support MSMEs to adapt and fit in a new emerging global economy that is more resilient, agile, and sensitive to sustainability,” added Dr Mwangi.
The guarantee complements Equity’s program with Mastercard Foundation of creating 5 million jobs especially for youth by providing $4.2bn in funding to MSMEs. The partnership with Mastercard Foundation is for $73 million for loan guarantee, capacity building and technical assistance.
Equity Bank Kenya, a partner of FMO since 2007, is part of the Equity Group, one of the largest financial service groups in East Africa.
For more information visit www.equitygroupholdings.com