FMO and Sidian Bank have signed a Ksh1.65 billion ($15 million) NASIRA loan portfolio guarantee. This facility under the NASIRA program, will strengthen Sidian Bank’s ability to provide financing to MSMEs affected by the COVID-19 crisis in Kenya.
A minimum of 30% of the total guarantee facility will be allocated specifically to young and female entrepreneurs. The guarantee will be provided in a Kenyan shilling equivalent.
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, women and COVID-19 affected entrepreneurs.
The NASIRA target groups are often underbanked due to high risks involved in lending to them. This is, amongst others, due to 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 service for the NASIRA target groups in particular those active in the agricultural sector.
“We expect to see MSME’s thrive through the improved access to financial products and services,” Henriette Geiger, EU ambassador to Kenya, says. “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.’’
Mr Chege Thumbi, CEO of Sidian Bank said the guarantee facility and technical assistance program will enable the bank to support its 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,” he said.
Huib-Jan de Ruijter, chief investment officer at FMO added, “We 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.”
![An Equity Bank branch. One Equity offers businesses a single till number that allows customers to make payments via M-Pesa, Airtel Money, PesaLink, Equitel, and the Eazzybanking app. [Photo/ Courtesy]](https://i0.wp.com/businesstoday.co.ke/wp-content/uploads/2022/01/equity-data.jpg?resize=150%2C150&ssl=1)
Funding the bank alone won’t turn things around in terms of profit for the Bank. You need the right people on the your board, you need a CEO with a vision that goes beyond just sharing it to the board. He must own the vision and actually lead the team towards it. The staff should think likewise and all must share the organization’s main purpose. Serve the client. Listen to your clients. Market your bank through service delivery and customer experience otherwise you’ll get funding after funding after funding but no breakthrough. It’ll remain the same K-Rep Bank with stunted growth traits.