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Equity Bolsters Support to SMEs With $75 Million

The African Guarantee Fund (AGF) and Equity Group Holdings Plc have signed an agreement which will provide a $75 million guarantee fund to...

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Equity Bolsters Support to SMEs With $75 Million
Jules Ngankam, CEO, African Guarantee Fund (left) and Dr. James Mwangi, MD & CEO, Equity Group Holdings Plc display signed partnership agreement. Equity Group Holdings has signed a partnership agreement with African Guarantee Fund for a guarantee facility of Ksh. 8.25 Billion shillings to ensure Equity can support businesses on the path to recovery as they get back to their normal operations.

The African Guarantee Fund (AGF) and Equity Group Holdings Plc have signed an agreement which will provide a $75 million guarantee fund to four of Equity’s bank subsidiaries within the Group. The facility is earmarked to support Equity to scale up its lending activities to women-owned and managed Micro, Small and Medium-Sized Enterprises in Kenya, Uganda, Rwanda and DRC, ensuring women are able to access credit at affordable interest at a time when it’s most needed.

Speaking during the signing ceremony, Dr James Mwangi, Managing Director and CEO of Equity Group Holdings stated that, “With this facility from African Guarantee Fund, whom we share a mission of supporting women MSMEs, we will be strongly positioned to continue to offer our customers particularly women in business access to funding at a time when the COVID-19 pandemic continues to impact negatively on businesses. Women MSMEs are key players in driving livelihoods for the majority of families, communities and the growth of the economy.

This support in the form of a guarantee fund will mitigate the credit risk Equity is exposed to as we continue to work with women MSMEs to navigate through these uncertain times and keep the lights of the economy on. This will ensure livelihoods and opportunities within the economy continue to accelerate as we revitalize economic activities to enable the economy to bounce back amidst the rollout of the vaccine. Our commitment is to continue working with MSMEs to finance them to recover and thrive, and where necessary transform and adapt their businesses to the changing environment and seize new business opportunities.”

In response to the COVID-19 crisis, Equity launched an offensive and defensive approach to support customers to sustain themselves while innovating alongside MSMEs who are leveraging on the opportunities that have presented within the crisis. The Group committed to loan repayment accommodation for up to 45% of the customers whose cashflows and operation cycle was deemed likely to be negatively impacted during the COVID-19 pandemic.

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Equity made the prudent decision to ensure cashflow was not impaired and in its third-quarter 2020 results, reported a 30% growth in its loan book in support of its customers who saw opportunities for green shoots and diversifications in the COVID-19 environment. Most of the new opportunities funded were in the manufacturing of PPE’s, logistics, online businesses, agro-processing, fast moving consumer goods and agriculture value chains.

Equity’s prudent approach to conserving its cashflow and supporting MSMEs through the COVID-19 crisis has provided confidence to its lending partners. AGF Group CEO Jules Ngankam said, “Our partnership with Equity Group is of great significance to the economies of Kenya, Rwanda, Uganda and the DRC given our mutual focus on the SME sector which has massive potential to drive economic growth. This partnership will also foster sustainable development particularly for women-led/owned businesses who will be supported under our Affirmative Finance Action for Women in Africa initiative and green business who will be supported under our Green Guarantee Facility. Working with Equity Group indeed provides us with a broad opportunity to create impact alongside their various initiatives.”

This is the fifth tranche for Equity Group after having signed a $50 million loan facility with IFC in September; a $100 million from Proparco in October and a EUR 125 million (Ksh 16.5 Billion) loan facility signed two weeks ago with the European Investment Bank and a US $100 Million (Ksh 11 Billion) Credit Facility with leading European development banks DEG, FMO and CDC-UK to fortify credit flows and liquidity to MSMEs.

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