KENYA – Dutch development bank FMO and Kenya’s Sidian Bank, have announced the signing of a US$15 million NASIRA loan portfolio guarantee to provide financing for Micro, Small and Medium Enterprises (MSMEs) affected by the COVID-19 pandemic in Kenya.
A minimum of 30 percent of the total guarantee facility will be allocated specifically to young and female entrepreneurs.
The guarantee will be provided in Kenyan Shilling equivalent.
Henriette Geiger, EU ambassador to Kenya said, ”We are happy to see FMO and Sidian Bank benefitting from the policies of the European Union, strengthening the MSMEs in Kenya, with a focus on young and female entrepreneurs. We expect to see MSME’s thrive through improved access to financial products and services. This is not only mitigating market uncertainties created by the COVID-19 pandemic but also, knowing that FMO and Sidian will promote the transfer of knowledge and skills, is having a positive social and environmental impact.”
The NASIRA program is a risk-sharing facility for local financial institutions, supported by the European Union and MASSIF, the financial inclusion fund FMO manages on behalf of the Dutch government.
It is a new way of unlocking support to underserved segments: youth, migrant, women and COVID-19 affected entrepreneurs.
Chege Thumbi, CEO of Sidian Bank said, ”Sidian Bank is excited to partner with FMO on this NASIRA program, by allowing customers who have a shortfall on the security required for credit facilities to access much-needed credit. This guarantee facility and technical assistance program will enable the bank to support our clients, in particular, young and female business owners to meet their growth potential. FMO has made a positive impact through their investment programs globally, and we are privileged to have their support.”
NASIRA target groups often remain underbanked due to high risks – both perceived and real – involved in lending to them and amongst others, due to the absence of collateral and credit history.
The guarantee program takes away this hurdle, by agreeing in advance to share possible credit losses.
A technical assistance program will be offered alongside the guarantee to support Sidian Bank in building staff capacities and developing financial and non-financial services for the NASIRA target groups in particular those active in the agricultural sector.
Huib-Jan de Ruijter, Chief Investment Officer at FMO said that they see a true focus in Sidian Bank on the lower SME segment, serving these small entrepreneurs with an increasing bank product offering tailored to meet MSME’s needs.
“We are very happy we can support Sidian Bank in developing this segment within the bank even further with the Nasira Guarantee,” he said.
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