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The African Development Bank (AfDB) approved on November 5, 2014 in Abidjan a US $148 million multi-sector senior Line of Credit (LoC) to Equity Bank Limited of Kenya (Equity Bank) for on-lending to key economic sectors in the country.
The LoC approved by the AfDB Board is expected to further leverage Equity Bank’s capacity to deepen its lending activities to vital economic sectors such as manufacturing, agribusiness, transportation, financial services, telecommunications, construction and energy.
Equity Bank is one of the largest banks in Kenya making up just under 10% of total bank lending. With over 9.2 million customers, Equity Bank Group is also at the forefront of the financial inclusion efforts of the country and closely associated with the empowerment of the traditionally unbanked.
In 2013, Equity Bank provided loans to SMEs totaling over KES 35 billion (US $412 million). The Group includes subsidiaries in Rwanda, Tanzania, Uganda and South Sudan which make up just 10.6% of Group net interest income and 19% of Group assets.
The LoC will contribute to Equity Bank’s continued financing of projects that are strategically important to the country’s development agenda by supporting the expansion of credit to SMEs, with associated benefits in private sector development, inclusive growth, increased employment and higher government tax revenues.
The LoC to Equity Bank is well aligned with both the Kenya Government’s and the Bank’s priority areas. It will enhance SME access to finance therefore contributing to their growth and development and will contribute to helping Kenya further its growth and development aspirations.
AfDB’s funding will contribute to diversifying and lengthening the maturity profile of Equity Bank’s funding and enhance its ability to extend medium to long-term financing to viable projects and borrowers. The provision of foreign currency resources for on-lending to entrepreneurs importing dollar-priced machinery and equipment also fosters additionality by providing a natural foreign-currency risk hedge.