Equity Bank receives US$50m from FMO for SME lending

Image: Citizen TV

KENYA – Equity Bank Kenya has secured US$50 million from the Dutch Development Bank (FMO) for onward lending to small and medium-sized firms hit by the Covid-19 pandemic.

Announcing the long-term funding, whose interest rate was not disclosed, FMO said the facility would uplift Equity Bank’s lending to the perceived risky small enterprises, who have been hard hit by the economic effects of the pandemic thus lowering their ability to save and tap loans.

“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,” said FMO chief executive Linda Broekhuizen.

“Together with the Capacity Development Project we are confident small entrepreneurs will get much needed support.’’

The facility has been disbursed under FMO’s financial program dubbed NASIRA that supports young, female, and migrant entrepreneurs in Sub-Saharan Africa.

“The NASIRA guarantee is part of the EU External Investment Plan. By investing US$5.6 billion in EU funds, an additional US$57.4 billion in total investment will be leveraged globally from the public and private sector”

Simor Mordue – EU Ambaassador to Kenya

The European Union- backed programme’s scope was widened in April last year to also reach small Covid-19 affected entrepreneurs in the region.

“It will enable small business owners to access affordable loans through local banks, microfinance institutions and other non-banking financial institutions,” said the EU Ambassador to Kenya, Simon Mordue.

NASIRA uses guarantees to allow local banks to on-lend to underserved entrepreneurs.

Kenyan banks have in recent years taken substantial loans from global funds, including the International Finance Corporation (IFC), European Investment Bank (EIB), Agence Française de Développement (AFD) and the African Development Bank (AfDB), attracted by relatively more favourable terms of debts like lower interest rates and longer maturity.

In addition to getting more capital to buffer their books, they have also been restructuring loans in order to protect the quality of their balance sheets, given the problems borrowers have faced in servicing debt due to the Covid-19 hit.

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