The Africa Guarantee Fund (AGF) has tripled guarantee facility to Sidian Bank from Sh500 million to Sh1.5 billion to allow Small and Medium Enterprises (SMEs) easily access loans.
Sidian Bank said between 30 per cent to 50 per cent of the facility will go to women led businesses, majority of which are in the informal sector but play a significant role in Kenya’s economy.
The enhancement of the portfolio guarantee limit is set to empower the bank to provide enhanced support to the Kenyan SME sector over a period of 7 years, commencing in 2023. The most prevalent challenges faced by SMEs is the lack of sufficient collateral to secure loans. AGF’s risk-sharing guarantee facility will enable Sidian Bank to scale up its lending activities to SMEs, ensuring that these businesses have access to the credit facilities they need to thrive.
Signed by Chege Thumbi, Chief Executive Officer of Sidian Bank and Jules Ngankam, Group Chief Executive Officer of African Guarantee Fund, this line of guarantee will not only help reduce challenges related to the absence of collateral encountered by SMEs but will further increase Sidian’s commitment to the SME segment while promoting their development in the private sector.
Speaking at the signing ceremony, Chege Thumbi, CEO of Sidian Bank said “This collaboration with the African Guarantee Fund marks a significant milestone in our efforts to provide accessible financial solutions. SMEs are the backbone of our economy, and we are dedicated to helping them thrive through various financial instruments designed to improve access to finance. This latest collaboration with the African Guarantee Fund further solidifies the bank’s commitment to the growth and prosperity of SMEs and increased contribution to the country’s GDP.”
On his part, African Guarantee Fund Group Chief Executive Officer, Jules Ngankam said, “We are excited about this renewed partnership and the prospect of having an even greater impact in reducing the SME financing gap, which is still a major concern in this critical sector and has been linked to the widespread closure of these small and medium businesses.”
“The additional facility gives Sidian Bank an extra security measure to expand its lending activities to SMEs, especially green businesses and gender-smart projects, and therefore fostering an inclusive and sustainable economic growth in Kenya” Jules added.
The African Guarantee Fund is a pan-African guarantee provider whose mission is to empower SMEs to fully play their role as engines of growth in the continent. By providing guarantees that are acceptable to financial institutions, AGF facilitates SME growth, innovation and job creation thereby contributing to economic growth. Through the Affirmative Finance Action for Women in Africa, an initiative of the African Development Bank and implemented by AGF, Sidian Bank will receive additional support to boost their lending to women led/owned SMEs.
Sidian Bank first partnered with AGF in 2021, and has also benefitted from AGF’s Capacity Development Assistance which has enabled them automate their loan management systems.
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