Equity Group granted KSh 5b by Proparco to support MSMEs in Kenya

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  • Proparco has granted Equity Group two guarantee facilities amounting to KSh 5 billion to help the Kenyan bank further support job-creating MSMEs
  • The two guarantees are the largest ever granted by Proparco to a financial institution
  • The French investment firm has also granted a €550,000 (KSh 70,000 million )technical assistance facility to support Equity Group Foundation’s health projects

Proparco has granted Equity Group two guarantee facilities, ARIZ and EURIZ totalling €39 million (5 billion KES) to help the Kenyan bank further support job-creating MSMEs.

This was part of the visit to Kenya of the French Minister Delegate for Foreign Trade and Economic Attractiveness, Franck Riester.

The French investment firm has also granted a €550,000 (KSh 70,000 million )technical assistance facility to support Equity Group Foundation’s health projects.

The EURIZ guarantee and the technical assistance grant benefited from support from the European Union and the Organization of African, Caribbean and Pacific States.

A breakdown of the funds

The first, a €19.5 million (2.5 billion KES) ARIZ guarantee will cover 50% of the amount of eligible loans allocated by Equity Bank to Kenyan MSMEs.

The second, a €19,5 million (2.5 billion KES) EURIZ guarantee will cover up to 70% of loans granted to women entrepreneurs or to MSMEs in sectors with a high social or societal impact such as Agriculture, Fisheries, Education and Health.

Over the past three years, Proparco and Equity Bank have become strong partners thanks notably to a $22.8 million loan granted in 2019 and a $100 million loan granted in October 2020, both intended to support the Bank’s commitment to Kenya’s MSMEs the actors in the real economy.

Launched in May 2019 with the support of the European Union (EU) and the European Development Fund, and the Organization of African, Caribbean and Pacific States (OACPS), the EURIZ guarantee aims to facilitate access to credit for MSMEs, in particular in sectors with a high development impact, in order to help them play their essential role in economic growth and job creation.

The two guarantees are the largest ever granted by Proparco to a financial institution.

They both contribute to Choose Africa, the French initiative dedicated specifically to African entrepreneurs, start-ups and MSMEs while supporting Equity’s Africa recovery and growth plan.

Proparco also allocated a €550,000 (70 million KES) technical assistance grant to the Equity Group Foundation (EGF).

This technical assistance, which also benefited from support from the EU and the OACPS, aims to support the development of EGF’s health pillar through several components.

This includes the development of entrepreneurial and management training for Equity Afia’s doctor-entrepreneurs, the implementation of a quality management program within the network and the strengthening of the Equity Afia clinic economic and social model.

Commenting on the funding, Djalal Khimdjee, Deputy CEO of Proparco said the organization is very proud to further strengthen its partnership with Equity Bank.

“Equity Bank historical and long-lasting commitment to MSMEs makes it a prominent partner of the AFD Group in the roll out of the Choose Africa initiative launched in 2018 by the French Government,” he said

These initiatives are expected to contribute to several Sustainable Development Goals, including 3 (Good Health and Well Being), 5 (Gender Equality) and 8 (Decent Work and Economic Growth).

The French investment firm has also granted a €550,000 technical assistance facility to support Equity Group Foundation’s health projects / Equity

Upon completing the signing, Dr. James Mwangi, Managing Director and CEO of Equity Group Holdings Plc stated that it has a strong relationship with Proparco and that they have shared vision for the transformation of lives and livelihoods on the African continent.

“It is this shared mission that continues to support and expand opportunities for wealth creation on the continent for our people, and which will allow Africa to thrive and prosper in the post-Covid economy and underpins our collaborations under the French “Choose Africa” and Equity’s post covid Africa resilience and growth plan,” Mwangi said.

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Equity Awarded

The deal comes days after the bank was named Africa’s best bank for Small and Medium Enterprises (SMEs) in the 2021 Euromoney awards.

While acknowledging this recognition, Mwangi, emphasized that the award reinforced and cements the Bank’s vision, of championing the socio-economic prosperity of the people of Africa.

“With support from various partners, Equity Group has strongly positioned itself to support SMEs (Small and Medium Enterprises) to keep their lights on during the prevailing COVID-19 pandemic which slowed down the economy and negatively impacted the cashflows of enterprises. By extending credit to them during the period, Equity demonstrated its commitment to walking the journey with its customers, and its empathy with their socio-economic situation brought about by the pandemic,” said Dr. Mwangi.

Despite the heavy impact of the pandemic, Equity said it increased its lending to SMEs, which by the close of 2020 stood at 51% of the total loan book.

With a key focus on priority areas aligned to achieving Kenya’s Big 4 agenda, Equity put a priority on financing SMEs in Agriculture, Manufacturing, Household and value-chain banking and health sector.

The bank acknowledged that MSMEs often face a host of growth challenges including managing and enabling financial transactions, access to credit, and expanding their reach.

“To solve some of these challenges, Equity has fortified its product offerings by providing them with customized, flexible, and integrated banking solutions, for both business owners and employees,” the bank said.

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Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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