NBK secures Sh1.1 billion loan guarantee scheme to boost SMEs’ credit uptake
The National Bank of Kenya (NBK) has partnered with African Guarantee Fund (AGF) to offer a partial guarantee for loan defaults arising from credit advanced to various private and public sector SMEs in the Water, Sanitation and Hygiene (WASH) sector, women-led businesses and Green Financing in Kenya.
The Kes1.13 billion partnership aims to strengthen NBK’s commitment to facilitate the promotion, growth and development of Small and Medium-sized Enterprises (SMEs).
The seven-year tenor guarantee will cover up to 50 percent of collateral needs for a qualifying facility with 75 percent cover for Women and Green SMEs; and will see the maximum cover for any borrower capped at Kes100 million.
Mr Peter Kioko the Acting Managing Director at NBK noted that the guarantee scheme will go a long way in mitigating the challenge of access to affordable credit with favourable terms, major challenge MSMEs in the WASH sector and women-led enterprises face as they aim at scaling up their businesses.
“This strategic partnership will enable our MSME customers in the targeted sector, to overcome the financing barrier in their day-to-day financial management needs and therefore, unlock opportunities to spur growth. With this partnership, we are going to increase the number of SMEs we finance and also pay special focus to the women entrepreneurs, among others to facilitate their growth and in turn the growth of our economy,” said Mr Kioko.
In the deal, AGF will share the risks envisioned by the bank in situations where the target SME borrowers are unable to meet the set collateral requirements.
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AGF Group CEO Jules Ngankam said, “By expanding access to finance for SMEs in the WASH sector, our guarantee will improve the lives and health of Kenyans through increased access to safe hygienic and sanitation facilities. We will also particularly support green SME projects and women-led/owned businesses that are at the helm of water and sanitation. Overall, our partnership with NBK is a boost to Kenya’s target of universal access to water, sanitation, and hygiene services and ultimately, a step towards achieving the UN Sustainable Development Goal six of ensuring access to water and sanitation for all.”
The guarantee builds on the foundational work of the bank’s MajiKonnect financing program for the water sanitation and hygiene sector towards MSMEs, corporates and water service providers (WSPs).
MajiKonnect, which was launched last year in partnership with Aqua for All, availed Kes5 billion towards improved access to affordable water and sanitation.
Qualifying borrowers must be registered and/or licensed SMEs domiciled in Kenya and must represent new or incremental business in the WASH sector geared towards investments designed to encourage growth for them to be eligible for credit from NBK.