Equity signs Ksh.11B credit facility with European development banks


Dr. James Mwangi, Managing Director and CEO of Equity Group Holdings Plc.
Dr. James Mwangi, Managing Director and CEO of Equity Group Holdings Plc.

In Summary

  • The facility is syndicated between DEG of Germany, CDC Group of the United Kingdom and FMO of the Netherlands.
  • The deal will support Equity to continue lending to MSMEs to bolster their resilience and growth during the COVID-19 environment and to foster job protection and sustainable economic opportunities.
  • The Ksh. 11billion facility comes on the heels of Ksh. 16.5billion signed last week with the European Investment Bank, another member of Team Europe.

Equity Group Holdings Plc. has signed a US $100 million (Ksh. 11billion) loan facility with Team Europe, Germany’s DEG, the Netherlands FMO and the UK’s CDC Group.

This in its continued commitment to strategically walk with MSMEs during the three years the COVID-19 pandemic is expected to adversely affect the business operating environment as a result of the adoption of COVID-19 coping and containments measures.

“The impact of the COVID-19 pandemic started as a health crisis, and quickly became an economic and humanitarian crisis that has seen more than 40% of Kenyan micro, small and medium 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. The syndicated facility indicates cross-cutting trust on Equity’s ability to manage a sophisticated financing mechanism. We value our long-term partnership with DEG, FMO and CDC. The three development banks recognize the critical role that Equity plays in promoting access to finance for MSMEs,” said Dr. James Mwangi, Managing Director and CEO of Equity Group Holdings Plc.

“As an inclusive regional financial institution, these facilities strengthen Equity’s position to further enhance the capacity of MSMEs who key actors in value chains and ecosystems in the economy are. By ensuring their survival and growth, the MSMEs will continue to protect jobs, create more employment and support lives and livelihoods in society,” said Dr. Mwangi.

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 were deemed likely to be negatively impacted during the COVID-19 pandemic.

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 of green shoots and diversifications in the COVID-19 environment.

Most of the new opportunities funded were in manufacturing of PPE’s, 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 MSMEs 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.

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

Seema Dhanani, Head of Office & Coverage Director, CDC, Kenya said: “We are 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.”

Mr. Huib-Jan de Ruijter, Chief Investment Officer (a.i.) at FMO, said: “We are 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.’’

Jane Marriott, the British High Commissioner to Kenya, said: “The UK is 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.”

This is the fourth tranche for Equity Group after having signed a $50 million USD (Ksh. 5.5billion) loan facility with IFC in September; a $100 million USD (Ksh. 11billion) from PROPARCO in October and a EUR 125 million (Ksh. 16.5billion) loan facility signed last week with the European Investment Bank to fortify credit flows and liquidity to MSMEs totaling Ksh. 44billion.

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