Home Banking Equity launches Sh678bn EAC economic stimulus plan

Equity launches Sh678bn EAC economic stimulus plan

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Equity Group MD James Mwangi (centre), Equity Group Director Strategy, Strategic Partnerships and Investor Relations, Brent Malahay (left) and Equity Group Chief Commercial Officer, Polycarp Igathe (right) during the launch of the Sh678 billion Africa recovery and resilience Plan aimed at accelerating the economic recovery and resilience of the Eastern and Central Africa region.

Equity Group has set up a Sh678 stimulus package to help firms and individual borrowers  in East and Central Africa  recover from the Covid-19 pandemic impact.

The plan was announced by Equity Group Managing Director James Mwangi.

It focusses on revival of primary sectors of food and agriculture, manufacturing and logistics, trade, Micro Small and Medium Enterprises as well as social impact and environmental investments. 

“A total of Sh678 billion (USD 6 billion) will be available to five million MSMEs and 25 million individual borrowers for the next five years,” Mwangi said.

He said the plan conceives that the five million businesses largely comprising MSMEs will create 50 million jobs, 25 million jobs directly and an equal number of jobs indirectly.

Small and Medium Enterprises in Kenya continue to struggle from the Covid-19 impact. With little or no financial support, most have closed shop while others are struggling to break even.

Kenya National Bureau of Statistics (KNBS) data shows that about 400,000 Micro, Small and Medium Enterprises (MSMEs) have  been dying within the first year of inception, in the last five years, raising concern over sustainability of this critical sector.

Over 80 per cent of annual jobs created come from MSMEs sector which also contributes up to 33.3 per cent of GDP.

According to Mwangi, Equity’s Eastern and Central Africa recovery and resilience plan is envisaged to provide financing of up-to two per cent of the combined GDP of the six economies, in which the Group operates.

It is projected to provide blended financing of short-term overdrafts, medium term loans and credit facilities which require long-term project and development financing in the private sector.

“The recovery plan will have special focus on youth and women, supporting them to be the primary drivers of creating and expanding opportunities in the real economy,” Mwangi said. 

Under food and agriculture, Equity says it will focus on unlocking productivity gains and value addition ecosystems to achieve food security for the region while increasing value creation.

The recovery and resilience plan also seeks to leverage on productive capacities and comparative advantages to transform the region into a manufacturing hub.

The plan covers value addition for primary products including retaining value in mineral processing to export semi-finished and finished products.

The plan targets financing of in-country manufacturing and regional supply chains to replace broken global supply chains following COVID-19 disruptions.

On trade and investments the Group’s plans to focus on the expansion of markets for the primary sectors of food and agriculture and the manufactured products, along with the realisation of investments to support growth of the two sectors.

To enhance the success rate among MSMEs and young people, Equity Group’s plan involves credit risk sharing mechanisms and capacity building through financial literacy and entrepreneurship training.

“The Group has pilot tested lending to young people under the Young Africa Works in partnership with Mastercard Foundation with a resounding success rate of 436,000 MSMEs trained and funded to the tune of Sh136 billion, and 1.2 million jobs created by the enterprises as they expand and grow on access of financing,”  Mwangi said.

Equity Group has partnered with the United Nations Resident Coordinators in the six countries for collaboration effort to champion the socio-economic transformation of Africa.