On February 21, 2022, Absa Bank Kenya Plc signed a Sh1.25 billion Loan Portfolio Guarantee Facility with the African Guarantee Fund (AGF) to enhance credit accessibility for local small businesses, including start-ups.
The five-year guarantee line will provide up to KES100 million in single borrower limit, enabling Absa Bank Kenya to offer financing to SMEs that may not meet collateral threshold requirements.
Through AGF's capacity development assistance, the partnership will also help Absa Bank Kenya enhance the business managerial capabilities of SMEs in areas such as governance, human capital management, quality control, packaging, financial management, and marketing.
Speaking at the signing ceremony, Absa Bank Kenya Managing Director Jeremy Awori emphasized the importance of the partnership in addressing the world's toughest problems, including reducing poverty and inequality by ensuring financing access among 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.
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 will receive up to 50% of cover.
African Guarantee Fund Group CEO Jules Ngankam stated that the organisation's objective is to enable SMEs to play their role in driving economic growth by closing the financing gap, thereby increasing sustainable growth and creating employment, skills, and wealth.
“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. This is in line with our commitment to reduce the $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,” said Mr. Ngankam.
AGF will also support Absa Bank Kenya's “Let's Unite to See Her Empowered (SHE)” initiative, targeting 600 Women-led Enterprises within 12 months.
Since launching its Wezesha Biashara SME programme five years ago, the bank has disbursed close to Sh50 billion in loans to the sector, indicating its commitment to investing in the growth of the local SME sector.
