The European Union and the European Investment Bank, working together in Team Europe, provide new support of 120 million euros (KES 15.8 billion) to Equity Bank to improve the financing of Kenyan companies most affected by the COVID-19 crisis.
The financing plan will support access to finance on appropriate terms for Kenyan SMEs, including in the agricultural sector, through loans of EUR 100 million from the European Investment Bank to Equity Bank and 20 million euros in grants from the European Union (EU).
New technical assistance, supported by the European Union, will further strengthen Equity Bank’s capacity to assess, execute and monitor longer-term investment projects in agricultural value chains and further develop the financing offer to long term for agriculture.
“As an inclusive regional financial institution, these facilities strengthen Equity’s position to further strengthen the strength of MSMEs who are key players in the value chains and ecosystems of the economy. By ensuring their survival and growth, MSMEs will continue to protect jobs, create more jobs and support lives and livelihoods in society, serving to build resilience as the pandemic subsides. , that vaccines become available in Kenya and that market growth resumes. We value our long-term partnership with the EIB and the European Union who have been accompanying us and our clients on the path to sustainable human development for many years, including their investment in making Kilimo Biashara evolve. We thank them for supporting our efforts to strengthen the role of MSMEs in boosting the economy towards prosperity, and thus supporting lives and livelihoods through market growth. “ said Dr James Mwangi, Group Managing Director and Group Chief Executive Officer Equity Group Holdings Plc.
“New EIB and EU support to Kenya’s leading partner Equity Bank will help Kenyan entrepreneurs, businesses and smallholder farmers access finance and better weather the economic challenges and business uncertainties caused by COVID- 19. Today’s New Agreements Show Team Europe and Kenya Joining Forces to Beat COVID and Help Businesses Thrive. Said Thomas Östros, Vice-President of the European Investment Bank.
“The EU is working to reorganize our cooperation with our African partners in order to tackle common challenges that affect the lives of people, especially young people. We want to rebuild better together from the COVID-19 pandemic to ensure a sustainable, green and fair recovery. The SME sector is a lifeline for employment, including for the most vulnerable populations and in particular in critical sectors such as agriculture. Agreements like the one signed today to help Kenyan SMEs mitigate the negative impact of COVID-19 and will help us achieve that goal. “ said Jutta Urpilainen, Commissioner for International Partnerships.
“EU and EIB support for small and medium-sized enterprises will directly support Kenyan entrepreneurs and farmers who need this funding to protect them from the effects of COVID-19. It is a true testament to our friendship with the people and government of Kenya. ” said Simon Mordue, European Union Ambassador to Kenya.
Kenya’s National Treasury observed a declining growth rate of 6.1% to 2.5% in 2020, making it the worst year for the country in more than a decade. Small and medium-sized enterprises (SMEs), which support the highest proportion of jobs in the region, are the most vulnerable and have limited access to external finance.
The Kenya – Team Europe COVID-19 Response Access to Finance and Kenya Agriculture Value Chain Facility initiatives were officially signed at Equity Bank headquarters in Nairobi during a COVID-19 compliant event to which the European Union Ambassador in Kenya, the EIB Regional Representative in East Africa and Kenyan Stakeholders. EIB Vice-President Thomas Östros participated remotely.
Improve access to finance through agriculture
Agriculture contributes about 51% of Kenya’s GDP (26% directly and 25% indirectly), 60% of employment and 65% of exports. The growth of economic activity based on agriculture is hampered by limited long-term financing, which delays its development and modernization.
Increasing private sector access to long-term finance is essential to unlock development potential in all sectors affected by the COVID19 pandemic, including agriculture and agricultural value chains.
Improving the economic resilience of Kenya’s COVID-19 activities
The new private sector finance initiative unveiled today will strengthen access to finance for Kenyan SMEs and boost business resilience at a time of global economic downturn and investment uncertainty.
In addition, the new cooperation with Equity Bank will stimulate investment, create decent jobs and contribute to the country’s recovery and sustainable development efforts.
The program announced today is part of the EU’s broader € 300 million response to the COVID-19 crisis in Kenya and has targeted EIB support for economic resilience in Africa.
Other partnerships with banks to provide access to financing could be forthcoming.
Strengthening cooperation with the main Kenyan financial institutions
Equity Bank is the main private sector support partner supported by the EIB in Kenya.
Over the past 10 years, the EIB has worked with 17 Kenyan banks and financial institutions to improve access to finance for entrepreneurs, smallholders and business expansion through lines of credit and targeted finance initiatives .
Since 1976, the European Investment Bank has provided over € 1.5 billion in financing to support private and public investment across Kenya.
The EU and Kenya have a long-standing partnership. EU cooperation with Kenya amounts to € 435 million for the period 2014-2020, covering the sectors of job creation and resilience, sustainable infrastructure and governance. The country is also supported by the EU Emergency Trust Fund for Africa; with more than 58.3 million euros for 2015-2019.
Today’s announcement illustrates the commitment of the EU and its Member States in Kenya to support the country’s main goals set out in the “Big 4 Agenda”. In 2018, the second phase of the Joint Programming Strategy was signed, aimed at boosting manufacturing, food and nutrition, security, affordable housing and universal health coverage.
Team Europe’s total global response to COVID-19 amounts to almost € 38.5 billion, combining resources from the EU, its Member States, the European Investment Bank and the European Bank for reconstruction and development. About 8 billion euros of this aid is intended for African countries. The program announced today is part of the EU’s larger € 300 million response to the COVID-19 crisis in Kenya.
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