Absa Bank Kenya partners with the African Guarantee Fund to help unlock credit for SMEs.

The African Guarantee Fund for Small and Medium-sized Enterprises (AGF) has signed a Sh1.25 billion Loan Portfolio Guarantee Facility with Absa Bank Kenya Plc (Absa Bank Kenya) to help local small enterprises, including start-ups, gain access to financing. The guaranteed line will be in existence for five years, with single obligor limits of up to KES100 million available for guarantee cover.

Other benefits for the SMEs from the partnership

In addition to facilitating credit access for local small businesses, the partnership will enable Absa Bank Kenya to assist small businesses in improving their managerial capabilities in areas such as governance, human capital management, quality control, packaging, financial management, and marketing, thanks to AGF’s capacity development assistance. When target SME consumers are unable to meet collateral threshold criteria, this will help to scale up SME lending activities.

The partnership, according to Absa Bank Kenya Managing Director Jeremy Awori, will enable a direct contribution to solving one of the world’s most difficult problems of poverty reduction and inequality reduction by ensuring financial access among SMEs.

“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.” Absa MD.

Qualifications for funding 

To be eligible for funding, targeted firms must be new or incremental businesses that are solely focused on investments and/or working capital for growth, with green and women-owned businesses receiving up to 75% coverage. Other businesses that aren’t green or women-owned will receive up to 50% coverage.

AGF’s goal is to promote sustainable growth for SMEs.

The goal of the organization is to help SMEs fulfill their potential as economic growth engines. AGF enables SMEs to promote sustainable growth and be a source of job, skills, and wealth creation by removing the most significant barrier, which is the financing gap.

“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.”  AGF Group CEO Jules Ngankam. 

AGF will support Absa Bank Kenya’s “Let’s Unite to See Her Empowered (SHE)” campaign, which aims to reach 600 women-led businesses in the next 12 months, through its Capacity Development program.

Absa Bank Kenya has taken a thorough approach to SME empowerment in recent years, training business owners on business sustainability, fundraising, bookkeeping, and networking in order to ensure profitable operations through tailored propositions and solutions.

The bank has disbursed around Sh50 billion in loans to the industry through its Wezesha Biashara SME program, which was launched five years ago.