Equity Bank secures Ksh.19.1 billion from IFC for MSMEs financing
Equity Bank has secured a Ksh.19.1 billion (US$.165 million) funding kitty from International Finance Corporation (IFC) to support Micro, Small and Medium Enterprises (MSMEs) in Africa.
This will see small businesses majorly involved in climate-smart businesses on the continent benefit from the multibillion financing programme.
IFC, Vice President Mohammed Gouled, said supporting MSMEs is central to their theme and objectives.
“Lending for small businesses can now be expanded with the aim of steering recovery of economies and vulnerable businesses ravaged by COVID-19,” said Gouled.
According to Equity, the monies will support at least 5 million MSMEs and 25 million households through the creation of over 50 million jobs both directly and indirectly.
“With IFC’s reach as the largest global development institution focused on the private sector equity, we will be able to further advance economic development by empowering and catalyzing the transformation of the lives and livelihoods of the African people and will enhance the success and sustainability of Equity’s ‘Africa Recovery and Resilience Plan’” said Equity Group CEO and Managing Director Dr. James Mwangi.
The financing deal was signed Tuesday in support of sustainable development for Africa through supporting small businesses on the continent.
According to the IFC, an affiliate financing arm of the World Bank, Equity Bank must commit to zero lending for businesses dealing in;
Coal-related projects such as the development or expansion of coal-fired power plants, coal mines, transportation assets used exclusively for coal, or infrastructure assets exclusively dedicated to supporting coal mines and coal transportation.
The deal also includes zero financing of any utility company that generates more than 20 percent of energy or revenues from coal, or have an annual coal production of 10 million tons or more; or have an installed coal-fired capacity of 5,000MW or more.
Dr. Mwangi agreed to allocate Ksh.9.2 billion (US$.80 million) equity towards climate-related interventions covering all subsidiaries over the next 5 years.
In its full year results for the year ended December 31, 2021, Equity Group’s profit surged by 98 percent to Ksh.39.17 billion from Ksh.19.78 billion in 2020.
The strong performance was driven by an increase in the net interest income which gained 25 percent to Ksh.68.8 billion up from Ksh.55.1 billion.
Expansion in its loan book also contributed to the lender’s profitability rising to Ksh.587.8 billion from Ksh.394.1 billion.
“When COVID- 19 struck, Equity Group sought its true north, its purpose and commitment to support its members. The Board and Management decided to focus on saving lives and livelihoods, giving dignity, and expanding opportunities for wealth creation while keeping the lights of the economies on,” said Dr. Mwangi.
Equity Bank maintains a network of 190 branches across Kenya, which includes 52 branches in Nairobi and has a customer base in excess of 14 million in six East African countries.
These are Kenya, DRC, Rwanda, Uganda, Tanzania, South Sudan, and a Commercial Representative Office in Ethiopia.
At the end of 2019, Equity Bank, with a balance sheet size worth Ksh.673.7 billion was listed number seven among the top 10 Banks in Africa in 2020 with a score of 5.82 in the overall category of the best performing banks.