Equity Bank and the International Finance Corporation (IFC) have launched a $20 million (KSh 2.5 billion) Risk Sharing Facility (RSF) to enhance unsecured microlending among underserved communities, especially refugees and their host communities.
- •The programme targets 14 marginalized counties across Kenya, among them Turkana and Garissa which host Kakuma and Dadaab refugee camps.
- •With a significant portion of micro, small, and medium enterprises (MSMEs) in Kenya lacking access to vital financial services – studies show unmet demand for finance is as high as 83%.
- •RSFs are bilateral loss-sharing agreements between IFC and an originator where the former reimburses the latter for a portion of the principal assets incurred.
“By expanding access to credit and other financial services, we are investing in the future of refugees and host communities unlocking opportunities to transform their lives, give dignity and expand opportunities for wealth creation,” Equity Group Managing Director and CEO James Mwangi said.
Equity Bank and IFC will each take 50% of the exposure, according to a statement from October 2024, and the IFC will also provide advisory services. Only 56% of Kenyan MSMEs are formally registered, and a further 73% of those registered reported being underserved.
“This facility is helping to unlock the entrepreneurial potential of refugees and their host communities, creating jobs, providing services, and driving development in the region,” Mary Porter Peschka, IFC’s Regional Director for Eastern Africa, said during the launch.
The deal will allow Equity Bank to offer micro loans to underserved entities, with the credit analysis focusing on character and capacity to pay rather than collateral.