Absa Bank, African Guarantee Fund to boost credit accessibility for local small businesses

KENYA – Absa Bank Kenya Plc has signed a KSh1.25 billion (US$10.99m) Loan Portfolio Guarantee Facility with the African Guarantee Fund (AGF) to boost credit accessibility for local small businesses and startups.

The guarantee line will be in place for a period of five years and avails up to KSh100 million (US$0.88m) in single borrower limit.

In addition to credit accessibility by local small businesses, the partnership, through AGF’s capacity development assistance, will enable Absa Bank Kenya to help small businesses enhance their business managerial capabilities in areas such as governance, human capital management, quality control, packaging, financial management and marketing.

This will assist to scale up SME lending activities in situations where the target SME clients are unable to meet collateral threshold requirements.

Absa Bank Kenya Managing Director Jeremy Awori said the partnership will allow for direct contribution to solving one of the world’s toughest problems of reducing poverty and reducing inequality by ensuring financing access among the SMEs.

“Considering the financing gap experienced by most SMEs due to their risk profile and lack of security, the bank is always exploring innovative ways to mitigate possible risks in this segment and at the same time tap into the huge opportunity within this growth sector and driver of our economy,” Mr. Awori said.

African Guarantee Fund Group CEO Jules Ngankam said the organisation’s objective is to enable SMEs to play their role of being the engine driving economic growth.

By closing the greatest obstacle, which is the financing gap, AGF enables SMEs to increase sustainable growth and to be a source of employment, skills and wealth creation. In turn, this serves to reduce poverty throughout the continent.

“Beyond the overall SME scope, our partnership with Absa Bank Kenya will provide particular support to women entrepreneurs and SME businesses qualifying as green transactions,” said Mr. Ngankam.

“This is in line with our commitment to reduce the US$42 billion gender financing gap facing women in Africa and on the other hand contribute to sustainable development through mitigation of the impacts of climate change.”

He further added that AGF through its Capacity Development programme will support Absa Bank Kenya’s ‘Let’s Unite to See Her Empowered (SHE)’ initiative which targets to reach out to 600 Women-led Enterprises within 12 months.

In the last few years, Absa Bank Kenya has taken a comprehensive approach to SME empowerment, in which business owners are trained on business sustainability, fundraising, bookkeeping, and networking to assure profitable operations through individualised propositions and products.

The bank, through its Wezesha Biashara SME programme launched five years ago, has disbursed close to KSh50 billion (US$439.75m) in loans to the sector.

To qualify for funding, targeted businesses must represent new or incremental business only geared towards investments and/or working capital for growth with green and women in business enterprises accessing up to 75% cover. Other businesses which are not green- and women related will receive up to 50% of cover.

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