Equity strengthens MSME loan book with Kshs. 11B from European lenders

Equity Group has secured Kshs. 11 billion ($100 million) credit facility from a group European lenders to support credit flow to Micro, Small and Medium Enterprises (MSMEs) for the next three years.

The loan which has been secured from Germany’s DEG, the Netherlands FMO and the UK’s CDC Group will ensure Equity Bank continues with its lending programme to MSMEs hurt by COVID-19 pandemic in order to enhance their resilience and growth during the health crisis.

“The impact of the COVID-19 pandemic started as a health crisis, and quickly became an economic and humanitarian crisis that has seen more than 40% of Kenyan micro, small and medium business owners affected by the great economic slowdown. Equity’s goal is to keep the lights of the economy on to sustain lives and livelihoods and facilitate the recovery of businesses as the economy begins to reopen,” said Dr James Mwangi, Equity Group Chief Executive Officer.

The facility is expected to help small businesses maintain their cashflow thereby protecting jobs that would have been lost as a result COVID-19 containment measures that have affected operations.

“The UK is fully committed to delivering a strong, resilient economic recovery from COVID-19 in Kenya. Through CDC, this UK support to Equity Bank will help Kenyan families and businesses to build back better, manage unexpected challenges and get back on their feet as soon as possible,” said Jane Marriott, the British High Commissioner to Kenya.

The three European financiers say supporting MSMEs is a long-term priority as the segment remains under-financed and in need of patient capital.

“DEG is delighted to realize a further financing for Equity Bank, together with our European partners CDC and FMO. Through our cooperation we are contributing to supplying local SMEs with credit, which is particularly important and in demand at present,” said Christiane Laibach, CEO of the DEG Management Board.

The new agreement comes a week after the bank secured a Kshs. 16.5 billion loan facility from the European Investment Bank (EIB) boosting MSME lending to Kshs 27.5 billion.

“As an inclusive regional financial institution, these facilities strengthen Equity’s position to further enhance the capacity of MSMEs who key actors in value chains and ecosystems in the economy are. By ensuring their survival and growth, the MSMEs will continue to protect jobs, create more employment and support lives and livelihoods in society,” Dr Mwangi added.

This is the fourth tranche for Equity Group after having signed a $50 million USD (Kshs 5.5 Billion) loan facility with IFC in September, $100 million USD (Kshs 11.0 Billion) from PROPARCO in October and a EUR 125 million (Kshs 16.5 Billion) loan facility signed last week with the European Investment Bank to fortify credit flows and liquidity to MSMEs totaling Kshs 44 Billion.

  

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