African Guarantee Fund issues first tranche of $50m guarantee to Equity Bank to support SMEs in Kenya, Uganda, Rwanda and DRC

The African Guarantee Fund and Equity Group Holdings Plc have concluded a guarantee facility amounting to USD 75 Million with a first tranche of USD 50 Million 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 a time when its 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 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 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 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. 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 the Affirmative Finance Action for Women in Africa initiative and green businesses 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.”

The AGF loan portfolio guarantee follows on Equity’s continuing efforts to secure and conserve capital in order to continue its strong support for MSMEs helping to empower them to recover, thrive and build back better from the effects of the COVID-19 crisis.