IFC has announced a USD100 million subordinated loan to Equity Bank Kenya to grow its lending operations Kenya.
The World Bank Group member’s loan facility will assist Equity Bank to increase its capital base and expand its lending programme to small and medium enterprises and climate finance operations that support renewable energy, green buildings, energy efficiency, and climate-smart agricultural projects in Kenya.
Equity’s renewable energy push
In July last year, Equity Bank and Orb Energy partnered to offer tailor-made loans to enable homes, institutions and industries acquire solar water heating systems.
Through the loans, Kenyans would be able to acquire solar water heaters that will see them save up to 60 per cent of their energy costs.
Orb’s Sunstream solar water heating systems cater for residential and buildings that consume over 100 litres of hot water a day as well as industrial facilities that consume up to 13,000 litres, or more, per day.
Solar energy disruption
In June last year, SunFunder agreed to finance a USD1.2 million loan facility for Questworks, a Kenyan firm focused on delivering a strong pipeline of commercial and industrial (C&I) solar projects.
As one of Nairobi’s earliest commercial and industrial renewable energy companies, Questworks has been involved in more than 2MW of solar projects in the country.
challenging Kenya Power’s monopoly
In February last year, PowerGen sought the approval from the Energy Regulatory Commission (ERC) to generate, supply and sell power to homes using its solar energy micro-grids.
The Nairobi-based renewable energy firm’s application is still under review.
PowerGen is seeking a licence to connect Unilever tea estate consumers in Kericho and other off-grid areas.
The company’s project consists of distribution networks, service lines for supplying electricity to households and small commercial establishments.
Two American companies Powerhive and Vulcan which are owned by Microsoft co-founder Paul Allen, are already in the Kenyan market selling small-scale solar power directly to consumers through mini-grids.
This means that if granted, PowerGen would become the third private company to sell electricity outside Kenya Power.
Equity Bank’s disruption of green lending
IFC will offer Equity Bank global knowledge in the SME and climate finance sectors, enhancing Equity’s ability to improve its environmental and social risk management system, develop a green lending strategy and build capacity for staff in key business units and target branches.
“Equity Bank’s expanded partnership with IFC will further strengthen our ability to deliver on a shared commitment to increasing financial inclusion and green finance. Equity Bank aims to disrupt the market by offering innovative financial products and services, and by pushing ourselves to ensure access to financial services are more readily available in Kenya,” said James Mwangi, CEO, Equity Bank Group.
Growing Equity Bank’s SME portfolio
Jumoke Jagun-Dokunmu, IFC’s Regional Director for Eastern Africa, said, “Our loan to Equity Bank helps an existing client expand and strengthen its lending in key areas. It promotes IFC’s climate action strategy in the financial sector, mainstreaming climate across different areas, including small and medium businesses.”
Equity Bank is an existing IFC client and previous loans have helped support the growth of the Bank’s SME portfolio.
The new loan supports the World Bank Group’s Climate Action Plan, which aims at increasing IFC’s global climate-related portfolio from 21 to 28 per cent by 2020, with total potential financing of USD29 billion annually by 2020.
You can also read how Green Mini-Grid Programme will light 3 DRC cities, Zambia’s surplus electricity to power the SADC and about the Swede agency investing USD20 million towards renewable energy in Rwanda.
Equity Bank focuses on extending financial services to under-served consumers and businesses. It pioneered agency banking in Kenya to broaden financial inclusion.
In the process, it made financial services accessible to small businesses and entrepreneurs in rural areas.
Through its foundation, Equity Group trained nearly two million low-income women, youth, and micro-entrepreneurs in financial literacy, and 25,303 micro and small-scale entrepreneurs in advanced small business development.