…funds to deepen Equity Bank’s SME credit support base

The European Investment Bank (EIB) has approved a € 50 million credit line to Equity Bank to facilitate onward lending to Small and Medium Enterprises across the region.


Speaking at the signing of the facility, Equity Bank Group Managing Director Dr. James Mwangi said, the funds received will be commercially advanced to eligible SME players to accelerate their business performance.

The credit line which is part of the EIB’s Global Loan facility, he explained, is expected to be channeled towards a growing number of regional SME businesses seeking local or international currency denominated business loans.

Such funds, he noted are already in high demand due to the ongoing infrastructure development and related projects. With such projects now in various stages, local SME’s he noted have been contracted to provide various on ground services and are therefore pushing up demand for medium term business loans.

To further support the sustainable absorption of the funds, Dr. Mwangi who was flanked by the EIB Head of Regional Representation Mr. Kurt Simonsen, confirmed that Equity Bank will be providing a full bouquet of services to SME’s including Entrepreneurship training and Peer Club networks to guarantee their success. 

“Beyond providing SME loans, we shall also provide them with access to technical business development specialists from Equity Consulting Group to enable them grow,” Dr Mwangi assured. “Our commitment is to advance an integrated solution that literally guides the SME transition to a small corporate level,” he added.

During the signing ceremony, EIB’s Head of Regional Representation Mr. Kurt Simonsen, further disclosed that Equity Bank will also be eligible to enjoy the EIB Technical Assistance programme support. The EIB Technical Assistance Programme support, he said is a detailed programme geared at raising the technical capacity of financial and related development partners.

While describing Equity Bank as a development partner, Simonsen said that the EIB’s facility will be directed at various SME projects in the agro industry, fishing, food processing, and manufacturing, construction, transport, tourism, education and healthcare sectors. 

Under the agreement with EIB, Equity Bank, Dr. Mwangi confirmed that the funds will also be available to any of its banking subsidiaries in Tanzania, Rwanda, Uganda and South Sudan.

“At Equity Bank, we are honored to be receiving this facility by the European Investment Bank which confirms our growing reputation as a development partner of choice by global lenders seeking to facilitate economic growth in East Africa,” Dr. Mwangi said. “Indeed, this facility will allow us to bridge existing financing gaps to the SME sector and will undoubtedly help to further leverage Equity Bank’s capacity to deepen its lending activities to these vital economic sectors,” he added.

Over the years, Equity Bank has successfully managed to grow its lending to players in the SME space as a proportion of the Bank’s loan book.  

Present in five countries across the East Africa region, Equity Bank is one of the largest banking institutions’ with a market spread of more than 10% of the total bank lending. With over 9.2 million customers, Equity Bank Group is also at the forefront of the financial inclusion efforts of the country and closely associated with the empowerment of the traditionally unbanked. 

In 2013, Equity Bank provided over 170,000 loans to SMEs totaling over KES35.6B (US$412million). The Group includes subsidiaries in Rwanda, Tanzania, Uganda and South Sudan which make up just 10.6% of Group net interest income and 14% of Group assets.

The facility will ensure that Equity Bank can continue to finance projects of strategic importance to the country’s development agenda by supporting the expansion of credit to SMEs with the associated benefits in private sector development, inclusive growth, increased employment and higher government tax revenues. 

The facility to Equity Bank is well aligned with both the Kenya Government’s and the Bank’s priority areas. It will enhance SME access to finance therefore contributing to their growth and development and contribute to helping Kenya further its growth and development aspirations.

Plans are also underway for EIB to further provide a € 30 million loan facility to Equity Bank to facilitate onward lending to Microfinance enterprises across the region.

Listed on the Nairobi and Uganda Securities Exchange, Equity Bank shareholders last week formally approved a proposal seeking to establish a holding company to act as the group investments vehicle.

In a strategic effort geared at setting the pace for the rollout of the Bank’s 3.0 strategy, the Bank is seeking to crystallize its Bank’s operations as an integrated financial services provider.

As part of the Equity 3.0 Strategy, the Bank plans to enhance its payment systems significantly on all fronts including mobile based platforms.

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