Equity Bank to Support SMEs through a Sh16.5 Billion Loan Facility

The Equity Group Holding Plc is meant to support SMEs for the next 3 years through the signed Sh16.5 Billion Loan Facility with European Investment Bank (EIB) and the European Union (EU).

This is as the group continues to hold onto its commitment to support medium and small enterprises during the expected adverse economic effects of the Covid-19 Pandemic in the next 3 years. 

The partnering firms aim to eliminate the risk of foreign exchange and thus chose to have the loan facility in Kenya Shillings. This matches the operating currency of SMEs. 

On the other hand, the Sh2.6 Billion grant (€20million) yields capacity building among the borrowers. This aims to reduce the risk of loan default allowing affordability through low-risk priced interest rates. 

Equity launched an ‘offensive and defensive’ approach in response to Covid-19 pandemic and its adverse economic effects. This approach aims to support customers to sustain themselves alongside MSMEs leveraging on the opportunities born during the pandemic.

Equity Group committed to 45% loan repayment accommodation. This is for customers with cash flows and operation cycles that seem to be negatively affected by Covid-19.

Equity recorded a 30% growth in its loan book in it’s third quarter of 2020. This growth was in its support to their customers who saw new opportunities of diversification and greener pastures amidst Covid-19. This included online businesses, manufacturing of PPE’s, agri-processing, logistics, fast moving consumer goods and agriculture value chain. 

“The impact of the Covid-19 pandemic started as a health crisis, which quickly became an economic and humanitarian crisis that has seen almost 40 percent of Kenyan small business owners negatively affected.” James Mwangi, Managing Director and CEO of Equity Group

According to the CEO, Equity Group aims to keep the economy running by ensuring businesses remain open. And as they remain open, they sustain jobs. Keeping markets open facilitates a quick recovery of both businesses and the economy. 

Expected usage

Equity, the MasterCard Foundation and the Kenyan Government are working on creating 5 Million jobs through the ‘Young Africa Works’. The 5 million jobs to be created for women and young people through entrepreneurship over the next 5 years. 

This facility extends over 5 years the intended period of the program. This is ensuring the matching of long-term investment by SMEs to emerge stronger post Covid-19. 

The loan facility covers other initiatives such as provision of technical assistance to enhance Equity’s capacity to access, execute and monitor longer-term investment projects. This is specific for projects in the agriculture value chains further developing it’s longer-term agricultural financing activities. 

Equity is collaborating with organizations that support MSMEs in Kenya such as the Kenya Private Sector Alliance (KEPSA). This includes Association of Manufacturers (KAM), Kenya National Chamber of Commerce and Industry (KNCCI) and Micro and Small Enterprises Authority (MSEA).

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