Dutch Development Bank FMO announced a $50 million (Ksh 5.48 billion) loan guarantee facility with Equity bank Kenya to support Kenyan micro-, small and medium-sized enterprises (MSMEs) to recover from the impacts of COVID-19.
The onward lending facility under FMO’s Program dubbed “Nasira” will also provide technical assistance to entrepreneurs, including the youth, female entrepreneurs and players in the agriculture value chain space.
“We are very happy to be able to support Equity Bank Kenya in weathering the COVID-19 storm. Funding for MSMEs is essential in lessening the impact of the pandemic on people’s livelihood and their communities,” said FMO CEO Linda Broekhuizen in a press release. “Together with the Capacity Development project, we are confident small entrepreneurs will get much-needed support.”
Nasira, a financial program that allows local banks in Sub-Saharan Africa and countries neighbouring Europe lend to groups viewed as too risky, has expanded its capacity to reach small businesses in the region, following a EUR 25 million (Ksh 3.34 billion) boost from the European Fund for Sustainable Development, and another EUR 7.5 million (KSh 1b) from the Dutch Government.
EU Ambassador to Kenya Simor Mordue says the financial program will enable small business owners to access affordable loans through banks and non-banking institutions.
“The NASIRA guarantee is part of the EU External Investment Plan. By investing €4.6 billion in EU funds, an additional €47 billion in total investment will be leveraged globally from the public and private sector. It will enable small business owners to access affordable loans through local banks, microfinance institutions and other non-banking financial institutions,” he said.
The onset of the pandemic has seen a growth of loan guarantee facilities to small businesses in Kenya. In July, Equity bank received a Ksh 5.4 billion IFC loan guarantee facility for small businesses. DTB and IFC inked a similar loan guarantee partnership deal in August, as banks in the country restructure loans worth up to Ksh 1.38 trillion.
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