Equity Group signs $100m credit facility with leading European devt banks to boost MSMEs

Equity Group Holdings Plc on Wednesday signed a $100 million loan facility with Germany’s DEG, the UK’s CDC Group, and the Netherlands FMO in its continued commitment to walk with MSMEs to survive the pandemic, recover, repurpose and thrive during and after the COVID-19 crisis.

In response to the COVID-19 crisis, Equity launched an offensive and defensive approach to support customers while innovating alongside MSMEs who are leveraging on the opportunities that have presented within the crisis.

The Group has also provided loan repayment accommodation and rescheduling for up to 45 percent of the customers whose cashflows were deemed likely to be negatively impacted by the COVID-19 pandemic. In its third quarter 2020 results, Equity reported a 30 percent growth in its loan book to support customers who saw opportunities of green shoots and diversifications in the COVID-19 environment. Most of the new opportunities funded are in manufacturing of PPE, logistics, online businesses, agro-processing, fast moving consumer goods and agriculture value chains.

As development finance institutions DEG, CDC Group and FMO invest to support the social and economic development of countries across Africa. Supporting SMEs is a long-term priority, particularly as the segment remains under-financed and in need of patient capital. The partnership is testament to the Development Finance Institution (DFI) community’s strategy of working closely together to support more private sector businesses, scale impact and improve millions of livelihoods.

Read Also: Akeredolu, deputy, chiefs take first Covid-19 jabs

In making the announcement, James Mwangi, managing director and CEO of Equity Group Holdings Plc, said the impact of the COVID-19 pandemic, which started as a health crisis but quickly became an economic and humanitarian crisis, has seen almost 40 percent of Kenyan small 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. We value our long-term partnership with DEG, FMO and CDC. We thank them for partnering with us in our efforts to support MSMEs to stimulate the economy back to vibrancy, and hence support lives and livelihoods through market optimization,” Mwangi said.

“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 in the economy. By ensuring their survival and growth the MSMEs will continue to protect jobs, create more jobs and support lives and livelihoods in society,” he said.

Christiane Laibach, CEO of the DEG Management Board, said DEG was delighted to realize a further financing for Equity Bank, together with its 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,” Laibach said.

Seema Dhanani, head of office & coverage director, CDC, Kenya, said they were delighted to partner with DEG and FMO to provide much-needed capital to support entrepreneurs and SMEs in Kenya.

“Equity is a natural partner for the DFI community with its mission to change people’s livelihoods through empowering entrepreneurs. CDC has invested in Kenya for over 70 years and is committed to increasing the resilience of businesses, boosting inclusive growth and contributing to the country’s long-term economic recovery,” Dhanani said.

Huib-Jan de Ruijter, chief investment officer (a.i.) at FMO, said FMO was very happy to be able to support EBK in weathering the COVID-19 storm.

“EBK is Kenya’s most innovative and MSME-oriented bank. The facility will be a lifeline for the ‘missing middle’, providing businesses with much-needed capital, while supporting jobs and communities. The syndication with DEG and CDC shows the strength of DFI partnership and collaboration,” de Ruijter said.

Jane Marriott, the British High Commissioner to Kenya, said the UK was 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,” she said.

This is the third tranche for Equity Group after having signed a $50 million loan facility with IFC in September and a $100 million from Proparco in October to fortify credit flows and liquidity to MSMEs.

Equity Group Holdings (EGHL) is a Pan-African financial services holding company listed on the Nairobi Securities Exchange, Uganda Securities Exchange, and Rwanda Stock Exchange. The Group has banking subsidiaries in Kenya, Rwanda, Uganda, South Sudan, Tanzania, and DRC and a representative office in Ethiopia. It has other subsidiaries in investment banking, insurance, telecom, fintech and social impact investments.

Equity Group has an asset base of nearly $9.3 billion. With over 14.2 million customers, the Group is one of the biggest banks by customer base in the region.