Equity Bank has announced its partnership with the Netherlands FMO Development Bank with the signing of a NASIRA loan portfolio guarantee facility. This Ksh. 5.5 billion ($50 million) facility is the second NASIRA guarantee signed with EBK with the support of EU funding.
The funding will enable Equity Bank to 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. The guarantee mitigates Equity’s risk in the MSME segment which has heavily affected by 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 so as 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 navigate through this uncertain times. 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 Capacity Development project aimed at supporting EBK’s offering towards companies and smallholder farmers in the agricultural value chains. The technical assistance will help in strenghthening EBK’s value proposition regarding financial and non-financial products and services.
Linda Broekhuizen, CEO 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 guarantee complements Equity’s program with Mastercard Foundation of creating 5 million jobs especially for youth by providing Ksh. 461 billion ($4.2 billion) in funding to MSMEs. The partnership with Mastercard Foundation is for Ksh. 8 billion ($73 million) for loan guarantee, capacity building and technical assistance.
“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.
This is the seventh tranche for Equity Group after having signed a Ksh. 5.5 billion loan facility with IFC in September last year, a Ksh. 11 billion from Proparco in October 2020, and a Ksh. 16.5 billion loan facility with the European Investment Bank. Equity also received Ksh. 11 billion Credit Facility with Leading European Development Banks DEG, FMO and CDC-UK and Ksh. 8.25 billion loan facility with the African Guaranty Fund. Recently, Equity received Ksh. 11 billion from the African Development Bank (AfDB) and Ksh. 8.03 billion facility from MasterCard Foundation to fortify credit flows and liquidity to MSMEs totaling Ksh. 76.78 billion.