Small and Medium-sized Enterprises (SMEs) in the country are set to benefit from a partnership in which NIC Bank Kenya signed a Loan Portfolio Guarantee agreement amounting to KES 515,900,000 with the African Guarantee Fund.
The partnership aims to unlock financing intended to facilitate the promotion, growth, and development of Small and Medium-sized Enterprises (SMEs).
Speaking during the partnership launch, AGF Group Deputy Chief Executive Officer, Mr. Jules Ngankam noted that the objective is to provide partial credit guarantees and capacity development to NIC Bank to stimulate financing of SMEs thereby unlocking their potential to deliver exclusive growth in the continent.
In Kenya, the small enterprises employ almost 80 percent of the working population and contribute approximately 28 percent to the GDP. However, businesses often struggle to get funding.
Figures from the Kenya National Bureau of Statistics show that in 2016, up to 400,000 small businesses shut down within the first two years of running and 2.2 million enterprises closed within five years of running mainly due to cash flow problems.
African Guarantee Fund CEO Jules Ngankam noted that the agreement with NIC bank is to offer partial credit guarantee and improve the lender’s capacity to finance small and medium-sized businesses.
“With this partnership, we are going to increase access to finance for SMEs. This will mean more job creation and revenue generation which directly aligns with AGF’s mission of catalyzing economic growth and poverty reduction in Africa. AGF is proud to have partnered with a bank that has a vision for SMEs and believes in its potential to spur the growth of this country,” said Mr. Jules Ngankam.
NIC’s Corporate Director Mr. Ellie Chiuri noted the bank’s position as a leading provider of financing to SMEs. The lender is supported by an extensive network of correspondent banking, trade financing experts, and a unique ability to handle risk.
The agreement between NIC Bank and African Guarantee Fund will improve access to finance for small businesses in Kenya and therefore lead to faster economic growth.
SMEs in Kenya, like in other African countries face major challenges when seeking financing in order to expand and grow their businesses. Recent studies have shown that SMEs in Kenya employs approximately 14.9 million Kenyans and contribute an estimated 28% of Kenya’s Gross Domestic Product.
