Equity Bank’s sixth loan deal tips SME kitty over Sh60 billion

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Equity Bank’s sixth loan deal tips SME kitty over Sh60 billion


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Equity Group chief executive officer James Mwangi. FILE PHOTO | NMG

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Summary

  • The bank has signed a Sh10.9 billion credit deal with the Africa Development Bank (AfDB).
  • Equity will not participate in the State-led credit guarantee scheme to unlock loans to SMEs having secured the mix of guarantees and cheap long-term loans.

Equity Bank #ticker:EQTY has signed loan deals worth Sh62.8 billion over the last six months as the lender builds up liquidity to expand lending to small businesses.

The bank signed the sixth facility, a $100 million (Sh10.9 billion) loan deal with the Africa Development Bank (AfDB), the latest in a series of long-term credit to allow the lender to offer concessional medium-term loans to small and medium enterprises.

In September last year, the bank signed a $50 million (Sh5.4 billion) loan facility with the International Finance Corporation (IFC), a $100 million (Sh10.9 billion) with French financier Proparco in October, and a 125 million euros (Sh16.5 billion) loan facility with the European Investment Bank this month.

Other credit facilities are $100 million (Sh10.9 billion) from European development banks DEG, FMO and CDC-UK, and $75 million (Sh8.25 billion) from the African Guaranty Fund to fortify credit flows and liquidity to SMEs.

“The timing of the facility’s disbursement could not have been more appropriate especially as businesses seek to remain operational in the midst of a Covid-19 pandemic that is causing financial havoc,” said Stefan Nalletamby, AfDB’s director for financial sector development.

Equity Bank will not participate in the State-led credit guarantee scheme to unlock loans to SMEs having secured the mix of guarantees and cheap long-term loans from several development finance institutions.

Equity Group CEO James Mwangi said the financing will unlock potential to lend to SMEs at 13 per cent for five years.

In September last year, the Kenyan government said it would provide Sh10 billion to guarantee commercial loans for SMEs a bid to cushion them from the economic fall-out arising from the coronavirus pandemic.

The loans would be issued through local banks which will be partly reimbursed for defaults alongside collateral provided by SMEs.

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