Equity Bank lent out Ksh 6.5 billion to Micro, Small and Medium Enterprises (MSMEs) as at the first quarter 2019, which is part of a Ksh 35.3 billion investment in social programmes through the Equity Group Foundation (EGF).
At least 44,111 MSMEs had accessed credit besides receiving entrepreneurship training, setting the pace for job creation and economic growth.
According to the Equity Group’s Integrated Report 2018, the efforts by the foundation are aimed at improving financial capability, individual and household financial security by connecting people at the end of the pyramid to expert financial education training as well as expanding access to financial services and products.
The lender’s data shows that EGF has trained 1,732,469 Kenyan women and youths in financial education. These women and youth have subsequently been able to access USD 0.36 million in credit and mobilized USD 24 million in savings.
Apart from Kenya, the foundation has scaled up the training to Uganda, Rwanda and Tanzania under the Fanikisha Plus Project where over 53,000 youth and women were trained.
Speaking while announcing a Ksh 6.2 billion net profit, Dr Mwangi said the bank has made a decision to offload upto Ksh150 billion investment worth of Treasury bonds for lending to MSMEs.
“As yields on government securities decline, our mark to market gain have grown 110 %, instead of reinvesting on maturity of treasury bonds we are now investing in lending,” Dr Mwangi said.
According to the Kenya National Bureau of Statistics, MSMEs in both the informal and formal sector contribute over 80% of employment opportunities in the country. However, most enterprises still face a significant barrier in accessing credit with a lack of physical collateral.
The move by Equity bank to lend to the Small enterprises is despite the interest rate cap severely constraining the ability of banks to offer risk adjusted pricing.
Efforts to finance the SMEs saw the lender awarded as the Best Bank in SME banking during this year’s Think Business Awards among 18 other accolades validating its investment Social programmes.