The European Investment Bank has signed two new credit lines for East-Africa this morning for a total of EUR 95 million (Kshs 10.45 billion) to be made available through Equity Bank and HFC Limited to support smaller local projects in Kenya, Tanzania, DRC and Uganda. This development highlights the commitment from Equity Bank, as EIB signs significant partnerships in the region.
EIB Vice President Pim van Ballekom, responsible for operations in East Africa, commented: “The credit lines signed today will not only benefit people in Kenya. They are meant for people in neighbouring countries as well. The EIB is committed to supporting Kenyan Banks in providing credit to the young and growing population in the region.
Kenya is increasingly becoming a hub for the region on many levels and we as a Bank must look at this from a very basic point of view: there is a young and growing population with enormous potential, you need credit to support that momentum.”
The EIB signed a EUR 75 million (Kshs 8.25 billion) credit line with Equity Bank. Under this, funds are earmarked for three subsidiaries. Specifically, EUR 36 million (Kshs 3.96 billion) for Equity Tanzania. Also, EUR 20 million (Kshs 2.2 billion) for Procredit DRC. Lastly, EUR 19 million (Kshs 2.09 billion) available through Equity Uganda.
As part of the agreement, the funds signed aim to foster job creation and poverty reduction. In addition, Equity Group will benefit from a EUR 2m (Kshs 220 million) technical assistance program funded by the EIB. This will support its strategy of transforming branches into SME business centers.
Equity Group Managing Director & CEO Dr James Mwangi said ‘With this facility of Kshs 8.25 billion (EUR 75 million) we will be in a position to support up to 1000 regional companies. Each will receive an average loan of nearly Kshs 10 million. Thus, assisting develop local entrepreneurs to compete at regional level. This furthers integration and cross-border trade.”
Next to this, a EUR 20 million (Kshs 2.2 billion) credit line was signed with HFC Limited. This was under the EIB’s East and Central Africa Private Enterprise Finance facility. This credit line will support HFC in providing longer-term financing to private enterprises. It will also support commercially operated public sector entities. This aligns with EU and national development priorities.
The agreement ensures that HFC, with EIB signs involved, will benefit from a funded technical assistance program. It is aimed at strengthening capacity in line with its strategy.
“I am proud to note that the success of the initial funding by EIB, has now brought more opportunities. We are happy to be recipients of another 20 million Euros," said Sam Waweru, HFC Managing Director. “This is undoubtedly an endorsement of the impact HFC is having on the SME sector. This new funding will be channeled towards financing the working capital and expansion of our growing SME customer base.”
Since September 2014, the credit lines in the region are supported by a EUR 5 million (Kshs 550 million) technical assistance (TA) program to support financial intermediaries and SMEs over a 3-year period. The program, where EIB signs impactful initiatives like the one with Equity Bank, will be extended for a further 3 years from April 2017. For an additional EUR 4.7 million (Kshs 517 million) and is coordinated out of Nairobi. There is a permanent presence of consultants in Kenya, Tanzania, Uganda, and Rwanda.
In the last seven years, the EIB has provided EUR 321 million (Kshs 35 billion) in credit lines for Kenyan businesses. Nearly 800 Kenyan companies have benefitted, creating over 9,000 new jobs in agriculture, education, transport, tourism, trade, and other sectors.
Background information:
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment to contribute towards EU policy goals. The European Investment Bank has supported transformational investment across Africa for more than 50 years. It has operated in Kenya since 1977. Over the last decade, with pivotal agreements like Equity Bank: EIB signs initiatives, it has provided more than EUR 22 billion (Kshs 2.42 trillion) for long-term investment across Africa.
Equity Group Holdings Limited is a financial services holding company in East Africa. The Group has banking subsidiaries in Rwanda, Kenya, Uganda, South Sudan, Tanzania, and DRC. There are additional non-banking subsidiaries engaged in the provision of investment banking, custodial, insurance agency, philanthropy, consulting, and infrastructure services.
Over the years, Equity Bank’s strategic actions, including the ones EIB signs, have helped build a social and economic brand. They have scaled up by providing financial services to the masses through a diversified distribution of its products and services. It has also had a unique approach to impacting the lives of the people in communities where it operates. It does this using existing infrastructure, enormous human capital and strong brand.
By Tim Smit, and Alex Muhia
