Equity Group, Ifc Expand Partnership And Investment To Support Small Business And Climate-Smart Projects
Equity Group and the International Finance Corporation (IFC) have signed a partnership agreement in support of the sustainable development of Africa through supporting micro, small, and medium-sized businesses (MSMEs) from all sectors of the economy including climate-smart businesses.
The partnership has seen IFC and its partners including the Dutch Development Bank (FMO), British International Investment (BII) and Symbiotics, responsibility from Switzerland commit USD 165 million (approx. Kes 19 billion) towards Equity’s `Africa Recovery and Resilience Plan’ that will see the Group, through its regional banking subsidiaries, finance at least 5 million MSMEs and 25 million households, therefore, creating 50 million direct and indirect jobs.
The credit facility of USD 165 million includes USD 50 million from IFC, USD 50 million from British International Investment (BII) and USD 65 million from Symbiotic, Responsibility and FMO, the Dutch entrepreneurial development bank, and a long-time shareholder in Equity through Arise Investments.
Further to the agreement signing, IFC and the IFC Financial Institutions Growth Fund acquired a 6.71 percent stake in Equity Group, East Africa’s largest banking group. The investment is IFC’s first in Africa that aligns with the corporation’s approach to increasing green equity investments in financial institutions.
Through this equity investment, Equity Group commits to zero lending for coal-related projects such as the development or expansion of coal-fired power plants, coal mines, transportation assets used exclusively for coal, and infrastructure assets exclusively dedicated to supporting coal mines, and coal transportation.
OR any utility company that generates more than 20 percent of energy or revenues from coal, has an annual coal production of 10 million tons or more, or has an installed coal-fired capacity of 5,000MW or more. Further, Equity Group has agreed to allocate USD 80 million equity towards climate-related interventions covering all subsidiaries over the next 5 years.
Speaking during the partnership signing ceremony, Equity Group Managing Director and CEO Dr. James Mwangi said, “As Equity Group, we are delighted to welcome IFC, a member of the World Bank Group to the Equity family as our second-largest shareholder.
With IFC’s reach as the largest global development institution focused on the private sector equity, we will be able to further advance economic development by empowering and catalyzing the transformation of the lives and livelihoods of the African people and will enhance the success and sustainability of Equity’s ‘Africa Recovery and Resilience Plan’.
IFC Vice President, Risk and Finance, Mohamed Gouled said, “Supporting small businesses, digital financial services and climate-friendly projects is central to IFC’s strategy in Africa to help create jobs, respond to climate change, and leverage the opportunities afforded by the digital economy. IFC’s deepening partnership with Equity Group reflects that strategy and will support economic growth in Africa as the continent recovers from the effects of the COVID-19 pandemic.”
Speaking on behalf of British International Investment (BII) Head of Financial Services and Africa Coverage, Stephen Priestley said, ” British International Investment is pleased to partner with the IFC in providing a new loan facility to Equity Group.
This being our second investment in Equity, this funding will further increase working capital for more local businesses and help to fund climate eligible projects in Kenya. This climate finance facility demonstrates BII’s ambition to scale climate finance across the African continent and our ongoing commitment to support sustainable, productive, and inclusive economic growth in Kenya.”
This new agreement with IFC is the second one within a period of one year that Equity Group has entered into following the signing of a USD 50 million credit facility to EquityBCDC aimed at providing additional local currency loans to underserved MSMEs in the DRC cushioning MSMEs in the country from currency fluctuations.