The European Investment Bank (EIB) has signed two new credit lines for East Africa for €95-million, or about Ksh (Kenya shilling) 10.45-billion, to be made available through financial institutions Equity Bank and HFC Limited to support smaller local projects in Kenya, Tanzania, the Democratic Republic of Congo (DRC) and Uganda.
EIB VP Pim van Ballekom, who is responsible for operations in East Africa, noted in a statement that the credit lines would benefit not only people in Kenya but also those in neighbouring countries.
He noted that the EIB was committed to supporting Kenyan banks in providing credit for the young and growing population in the region.
“Kenya is increasingly becoming a hub for the region on many levels and we, as a bank, must look at this from a very basic point of view – there is a young and growing population with enormous potential, and you need credit to support that momentum,” Van Ballekom said.
The EIB signed a €75-million credit line with Equity Bank, under which funds are earmarked for three subsidiaries: €36-million for Equity Tanzania, €20-million for Procredit DRC and €19-million for Equity Uganda.
The on-lending will be available in US dollars or local currencies to contribute to job creation and poverty reduction.
“With this facility of Ksh8.25-billion (€75-million), we will be in a position to support up to 1 000 regional companies with an average loan of nearly Ksh10-million, thereby assisting in developing local entrepreneurs to compete at regional level, furthering integration and cross-border trade,” Equity Group MD and CEO Dr James Mwangi noted in the same statement.
In addition, Equity Group will benefit from a €2-million technical assistance programme funded by the EIB to support its strategy to transform branches into small and medium-sized enterprise (SME) business centres.
Further, a €20-million credit line under the EIB’s East and Central Africa Private Enterprise Finance facility was signed with HFC Limited. This credit line will support HFC in providing the much-needed, longer-term financing for private enterprises and commercially operated public-sector entities in productive sectors in Kenya, in line with European Union and national development priorities.
HFC will also benefit from an EIB-funded technical assistance programme aimed at strengthening capacity in line with its strategy.
“I am proud to note that the success of the initial funding by EIB has now brought more opportunities and we are happy to be recipients of another €20-million, which is undoubtedly an endorsement of the impact HFC is having on the SME sector. “This new funding will be channelled towards financing the working capital and expansion of our growing SME customer base,” HFC MD Sam Waweru added in the same statement.
Since September 2014, the credit lines in the region have been supported by a €5-million technical assistance programme to support financial intermediaries and SMEs over a three-year period.