Boon for SMEs as Equity Group secures Ksh16.5bn from EU, EIB

The facility extends over the entire period of the program’s 5 years, ensuring the matching of long-term investment by SMEs to emerge stronger post the COVID-19 period.

The financing package through the EUR 20 Million grant covers amongst other initiatives, the provision of technical assistance to enhance Equity Bank’s capacity to assess, execute and monitor longer-term investment
projects in the agriculture value chains and further develop its longer-term agricultural financing activities with a focus on youth and woman while enhancing their capacity to lower their credit risk and hence the interest rate at which they will obtain credit.

Speaking on behalf of the European Investment Bank, Vice President Thomas Ostros said, “New EIB and EU support for leading Kenyan partner Equity Bank will help entrepreneurs, business and agricultural small holders across Kenya to access finance and better withstand the economic challenges and business uncertainties caused by COVID-19.

Today’s new agreements demonstrate Team Europe and Kenya joining forces to beat COVID-19 and help business flourish.” The ability of Equity to attract funding from global agencies such as the European Investment Bank and the European Union speaks to Equity’s global standing, reputation and trust to support economic stability during the COVID-19 pandemic.

Equity plays a central role in the global development agenda due to the
interconnected nature of the economy and its ability to deliver strategic results due to its size and capacity.

The facility also indicates the confidence that global lenders have in the Kenyan economy. Equity not only wants to support export MSMEs but also those in the domestic economy and hence has borrowed in Kenya Shillings to ensure no mismatch in currency fluctuations which will further support the domestic market and protect it from exposure to the exchange rate.

Both European institutions will support Equity’s lending to MSMEs, which acknowledges that the COVID-19 outbreak has been a shock to Kenya’s MSMEs. MSMEs eligible for Equity’s lending through the facility will be
active in high-growth market sectors which serve to create new manufacturing or distribution activities in the
economy as well as strengthen and develop eco-systems around existing industrial activities.

“As an inclusive regional financial institution these facilities strengthen Equity’s position to further enhance the strength of MSMEs who are key actors in value chains and ecosystems of the real economy in agriculture,
trade, manufacturing, health and MSME sectors. By ensuring their survival and growth the MSMEs will continue to protect jobs, create more jobs and support lives and livelihoods in society, serving to create resilience as the pandemic subsides, as vaccines become available in Kenya, and as market growth returns,”
said Dr. Mwangi.

“We value our long-term partnership with the EIB and the European Commission who have walked with us and our customers on our path for sustained human development for many years including their investment to scale our focus in agriculture through Kilimo Biashara. We thank them for supporting our efforts to strengthen the role of MSMEs to stimulate the economy back to prosperity, and hence support lives
and livelihoods through market growth.”

The guarantee complements Equity’s program with Mastercard Foundation, Young Africa Works, of creating 5 million jobs especially for youth by providing $4.2bn in funding to MSMEs coupled with capacity building in
Financial Literacy, Entrepreneurship, Digital Literacy, and business development services including mentorship, coaching, and market linkages support.

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

This is the third tranche for Equity Group after having signed a USD $50 Million facility with IFC in September
and a USD $100 Million facility from Proparco in October bringing the total to USD $275 Million, USD $150
Million and EUR 125 Million – an equivalent of bringing Kshs 33 Billion to fortify credit flows and liquidity to
MSMEs.