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 guaranteed line will be in place for five years and will provide up to KES100 million in a single borrower limit.
Through AGF's capacity development assistance, the partnership will enable Absa Bank Kenya to help small businesses improve their business managerial capabilities 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 said the partnership will contribute directly to solving one of the world's toughest problems: 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 tap into the huge opportunity within this growth sector and driver of our economy,” Mr. Awori said.
The partnership will provide particular support to women entrepreneurs and SME businesses qualifying as green transactions, in line with AGF's commitment to reducing the $42 billion gender financing gap facing women in Africa and contributing to sustainable development through the mitigation of climate change impacts.
AGF Group CEO Jules Ngankam said the organization's objective is to enable SMEs to play their role as the engine driving economic growth by closing the financing gap, enabling SMEs to increase sustainable growth and become a source of employment, skills, and wealth creation, thereby reducing poverty throughout the continent.
Through its Capacity Development program, AGF will support Absa Bank Kenya's “Let's Unite to See Her Empowered (SHE)” initiative, which targets 600 women-led enterprises within 12 months.
Absa Bank Kenya has taken a comprehensive approach to SME empowerment, training business owners on business sustainability, fundraising, bookkeeping, and networking to assure profitable operations through individualized propositions and products.
“Kenya is home to some of the most robust SMEs that play a critical role in the growth and development of the country's economy for social prosperity. We are excited to be part of this partnership as we believe that empowering SMEs and start-ups positively impacts the growth of our economy and improves the livelihoods of the communities where we operate,” Mr. Awori added.
The bank, through its Wezesha Biashara SME program launched five years ago, has disbursed close to Sh50 billion in loans to the sector, indicating its intention to invest in the growth of the local SME sector, which has become the key driver of economic growth, contributing up to 33% of GDP and employing more than 50% of the country's workforce.
