News

Equity, IFC in $165 million partnership to support SMEs


IFC to support Equity’s lending to5 million SMEs under the ‘Africa Recovery and Resilience Plan’

Nairobi, Kenya | THE INDEPENDENT | Equity Group and the International Finance Corporation (IFC) have signed a partnership agreement in support of the sustainable development of Africa through supporting micro, small and medium sized businesses (MSMEs) from all sectors of the economy including climate-smart businesses. Expansion of the relationship also includes IFC and IFC Financial Institutions Growth Fund acquiring a minority shareholding stake in Equity Group.

The partnership has seen IFC and its partners including the Dutch Development Bank (FMO), British International Investment (BII) and Symbiotics, ResponsAbIility from Switzerland commit $165 million  towards Equity’s `Africa Recovery and Resilience Plan’ that will see the Group, through its regional banking subsidiaries, finance at least 5 million MSMEs and 25 million households therefore creating 50 million direct and indirect jobs.

The credit facility of $165 million includes $50 million from IFC, $50 million from British International Investment (BII) and $65 million from Symbiotic, Responsibility and FMO, the Dutch entrepreneurial development bank and a long-time shareholder in Equity through Arise Investments.

Further to the agreement signing, IFC and the IFC Financial Institutions Growth Fund acquired a 6.71 percent stake in Equity Group, East Africa’s largest banking group. The investment is IFC’s first in Africa that aligns with the corporation’s approach to increase green equity investments in financial institutions.

Through this equity investment, Equity Group commits to zero lending for 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 support coal mines and coal transportation, or 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. Further, Equity Group has agreed to allocate USD 80 million equity towards climate related interventions covering all subsidiaries over the next 5 years.

Speaking during the partnership signing ceremony, Equity Group Managing Director and CEO Dr. James Mwangi said, “As Equity Group, we are delighted to welcome IFC, a member of the World Bank Group to the Equity family as our second largest shareholder. 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’.

Equity’s Africa Recovery and Resilience Plan has been built on five key pillars hinged on its twin engine: the social engine and the economic engine. Through its social impact initiatives, Equity will continue investing in the social transformation and environmental impact of communities within East and Central Africa to drive inclusive growth.

On the economic engine, the Group will leverage on its regional footprint, strong financial capability, and brand trust to accelerate Africa’s growth by supporting MSMEs and driving their inclusion into formal value chains, championing access to trade and investment opportunities, leveraging on the region’s productive capacities to catalyze the growth of manufacturing and logistics and promoting investment in agriculture and renewable energy by businesses.

Also speaking at the signing ceremony, IFC Vice President, Risk and Finance, Mohamed Gouled said, “Supporting small businesses, digital financial services and climate-friendly projects is central to IFC’s strategy in Africa to help create jobs, respond to climate change, and leverage the opportunities afforded by the digital economy. IFC’s deepening partnership with Equity Group reflects that strategy and will support economic growth in Africa as the continent recovers from the effects of the COVID-19 pandemic.”

Speaking on behalf of British International Investment (BII) Head of Financial Services and Africa Coverage, Stephen Priestley said, ” British International Investment is pleased to partner with the IFC in providing a new loan facility to Equity Group. This being our second investment in Equity, this funding will further increase working capital to more local businesses and help to fund climate eligible projects in Kenya. This climate finance facility demonstrates BII’s ambition to scale climate finance across the African continent and our ongoing commitment to support sustainable, productive, and inclusive economic growth in Kenya.”

This new agreement with IFC is the second one within a period of one year that Equity Group has entered into following the signing of a USD 50 million credit facility to EquityBCDC aimed at providing additional local currency loans to underserved MSMEs in the DRC cushioning MSMEs in the country from currency fluctuations.

In January 2021, Equity Group also signed a USD 100 million loan facility with UK’s CDC (now BII) Group, and the Netherlands FMO (which included Germany’s DEG) in its continued commitment to walk with MSMEs to survive the pandemic, recover, repurpose, and thrive during and after the COVID-19 crisis. FMO is also a long-term investor through Equity Group’s majority shareholder Arise Investment.

The post Equity, IFC in $165 million partnership to support SMEs appeared first on The Independent Uganda:.



Source link

Leave a Reply

Your email address will not be published.