The European Union and the European Investment Bank, working together as Team Europe, are providing US$143mn (KES 15.8 billion) of new support for Equity Bank to enhance financing to Kenyan companies most impacted by the COVID-19 crisis
The financing package will support access to finance at appropriate conditions for Kenyan SMEs, including in the agriculture sector, through US$119mn loans from the European Investment Bank to Equity Bank and US$23mn of European Union (EU) grant support.
New technical assistance, backed by the European Union, will further strengthen Equity Bank’s capacity to assess, execute and monitor longer-term agricultural value chains investment projects and further develop the provision of long-term financing for agriculture.
James Mwangi, group managing director and group CEO of Equity Group Holdings, said, “As an inclusive regional financial institution these facilities strengthen Equity’s position to further enhance the strength of MSMEs which 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, serving to create resilience as the pandemic subsides, vaccines become available in Kenya, and market growth returns.
“We value our long-term partnership with the EIB and the European Union who have walked with us and our customers on our path for sustained human development for many years including their investment to scale Kilimo Biashara. We thank them for supporting our efforts to strengthen the role of MSMEs to stimulate the economy back to prosperity, and hence support lives and livelihoods through market growth.”
Thomas Östros, vice-president of the European Investment Bank, said, “New EIB and EU support for leading Kenyan partner Equity Bank will help entrepreneurs, business and agricultural smallholders across Kenya to access finance and better withstand the economic challenges and business uncertainties caused by COVID-19. Today’s new agreements demonstrate Team Europe and Kenya joining forces to beat COVID and help the business flourish.”
Jutta Urpilainen, commissioner for international partnerships. Stated, “The EU is working to revamp our cooperation with our African partners to tackle the common challenges that affect people’s lives, in particular the youth. We want to build back better together from the COVID-19 pandemic to guarantee a sustainable, green and just recovery. The SME sector is a lifeline for employment, including for the most vulnerable populations and in particular in critical sectors such as agriculture. Agreements like the one signed today to support Kenyan SMEs to mitigate the negative impact of COVID-19 and will help us to achieve this.”
Improving access to finance by agriculture
Agriculture contributes about 51% to Kenya’s GDP (26% directly and another 25% indirectly), 60% of employment and 65% of the exports. The growth of agriculture-based economic activity is constrained by limited long-term financing, which delays its development and modernisation.
Increasing private sector access to long-term financing is crucial to unlock development potential across all sectors impacted by the COVID19 pandemic, including agriculture and agricultural value chains.
Enhancing economic resilience of Kenyan business of COVID-19
The new private-sector financing initiative unveiled today will strengthen access to finance by Kenyan SMEs and boost business resilience at a time of global economic slowdown and investment uncertainty.
In addition, the new cooperation with Equity Bank will stimulate investment, creating decent jobs and contributing to the country’s recovery efforts and sustainable development.
The programme announced today is part of the larger €300 million EU response to the COVID-19 crisis in Kenya and targeted EIB support for economic resilience across Africa.