Equity Group has signed a US $100 million (Kshs 11 billion) loan facility with Team Europe, Germany’s DEG, the Netherlands FMO and the UK’s CDC Group in its continued commitment to strategically walk with micro, small and medium enterprises (MSMEs) during the three years that the Covid-19 pandemic is expected to adversely affect the business operating environment. The group has launched an offensive and defensive approach to support customers to sustain themselves while innovating alongside MSMEs who are leveraging the opportunities presented within the crisis.
It has also committed to loan repayment accommodation for up to 45% of the customers whose cashflows and operation cycle were deemed likely to be negatively impacted by the Covid-19 pandemic. Equity made the prudent decision to ensure cashflow was not impaired and in its third quarter 2020 results, it 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 personal protective equipment, logistics, online businesses, agro-processing, fast moving consumer goods as well as agriculture value chains.
As development finance institutions DEG, CDC Group and FMO invest to support the social and economic development of countries across Africa. Supporting MSMEs is a long-term priority particularly as the segment remains under-financed and in need of patient capital. The partnership demonstrates the development finance institution (DFI) community’s strategy of working closely to support more private sector businesses, scale impact and improve millions of livelihoods.
In making the announcement, Dr. James Mwangi, managing director and CEO of Equity Group Holdings said: “The impact of the Covid-19 pandemic started as a health crisis, and quickly became an economic and humanitarian crisis that has seen more than 40% of Kenyan micro, small and medium business owners affected by the great economic slowdown. Equity’s goal is to keep the lights of the economy on to sustain lives and livelihoods and facilitate the recovery of businesses as the economy begins to reopen. The syndicated facility indicates cross-cutting trust on Equity’s ability to manage a sophisticated financing mechanism. We value our long-term partnership with DEG, FMO and CDC. The three development banks recognize the critical role that Equity plays in promoting access to finance for MSMEs.”