NAIROBI, March 3 (Reuters) – Kenya’s Equity Group Holdings on Wednesday announced it had launched a loan facility worth 75 billion shillings ($ 685 million) to help small and medium-sized enterprises (SMEs) recover from the economic impact of the COVID-19 pandemic.
“For SMEs that have been bankrupt for a year, working capital is exhausted,” CEO James Mwangi told a press conference in the capital Nairobi.
Mwangi said Equity would spend around 400 billion shillings over the next five years on businesses.
He said the facility had guarantees worth 35 billion shillings from groups such as the Mastercard Foundation, the European Investment Bank, the African Guarantee Fund, France’s Proparco and the African Fund for development, allowing businesses to borrow at 13% for loans of up to five years.
Kenya’s second-largest lender also operates in South Sudan, Tanzania, Rwanda, Uganda and the Democratic Republic of the Congo.
In the first nine months of 2020, its profit before tax fell to 19.76 billion shillings from 24.79 billion shillings in the same period of 2019.
During the same period, its loan portfolio increased 30% to 453.9 billion shillings, while customer deposits increased 45% to 691 billion shillings.
Mwangi said the bank offered up to 45% of its borrowers a repayment moratorium of up to three years as a cushion against the effects of COVID-19, but only 35% accepted the offer by the end of 2020.
Last year, the government said it was establishing a credit guarantee scheme for small and medium-sized businesses affected by the coronavirus and that its capital would eventually reach at least 100 billion shillings.
Mwangi said Equity had pulled out of the government-run program, given what it launched on Wednesday.
“There are about 40 banks, why don’t we allow other banks to play on it? So we complement the government by bringing in the international community and the development banks,” he told reporters. .
($ 1 = 109.5500 Kenyan shillings) (Reporting by George Obulutsa, edited by Sonya Hepinstall)