Absa Bank Kenya has signed an Ksh. 1.25 billion loan portfolio guarantee facility with the African Guarantee Fund (AGF). This is in a bid to boost credit accessibility for local small businesses, including start-ups. The guarantee line will be in place for a period of five years and avails up to Ksh. 100 million in single borrower limit.
The partnership through AGF’s capacity development assistance, will enable Absa to help SMEs enhance their business managerial capabilities in various areas. This is including governance, human capital management, quality control, packaging, financial management and marketing. This will assist to scale up SME lending activities in situations where the target SME clients are unable to meet collateral threshold requirements.
To qualify for funding, targeted businesses must represent new or incremental business only geared towards investments and or working capital for growth. Green and women in business enterprises will have access of up to 75% cover. Other businesses which are not green- and women related will receive up to 50% of cover.
Speaking at the signing ceremony, Absa Bank Kenya Managing Director Jeremy Awori said the partnership will allow for direct contribution to reducing poverty and inequality. “Considering the financing gap experienced by most SMEs due to their risk profile and lack of security, the bank is always exploring innovative ways to mitigate possible risks in this segment and at the same time tap into the huge opportunity within this growth sector and driver of our economy,” said Mr. Awori.
On his part, African Guarantee Fund Group CEO Jules Ngankam said, “Beyond the overall SME scope, our partnership with Absa Bank Kenya will provide particular support to women entrepreneurs and SME businesses qualifying as green transactions. This is in line with our commitment to reducing the $42 billion gender financing gap facing women in Africa and on the other hand contribute to sustainable development through mitigation of the impacts of climate change.”