(Adds details on the lending facility, background)
NAIROBI, March 3 (Reuters) – Kenya’s Equity Group Holdings said on Wednesday it had launched a lending 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 the SMEs that have been out of business for a year, working capital has been depleted,” CEO James Mwangi said at a news conference in the capital Nairobi.
Mwangi said Equity would dedicate about 400 billion shillings over the next five years to the businesses.
He said the facility had guarantees worth 35 billion shillings from groups that include Mastercard Foundation, the European Investment Bank, the African Guarantee Fund, France’s Proparco and the African Development Fund, allowing businesses to borrow at 13% for loans with tenors of up to five years.
Kenya’s second biggest lender also operates in South Sudan, Tanzania, Rwanda, Uganda and the Democratic Republic of Congo.
In the first nine months of 2020, its pre-tax profit fell to 19.76 billion shillings from 24.79 billion shillings in the same period of 2019.
Over the same time frame, its loan book grew 30% to 453.9 billion shillings, while customer deposits increased 45% to 691 billion.
Mwangi said the bank had offered up to 45% of its borrowers a repayment moratorium of up to three years as a cushion against COVID-19 effects, but only 35% had taken up the offer as of the end of 2020.
Last year, the government said it was setting up a credit guarantee scheme for small and medium-sized businesses hit by the coronavirus and that its capital would eventually rise to at least 100 billion shillings.
Mwangi said Equity had opted out of the government-led scheme, given what it had launched on Wednesday.
“There are about 40 banks, why don’t we allow other banks to play on that? So we complement the government by bringing international community and development banks,” he told reporters.
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