Absa inks Sh1.25b credit guarantee deal for SMEs

Absa Bank Kenya has signed a Sh1.25 billion loan guarantee facility with the African Guarantee Fund (AGF) to boost credit accessibility for small and medium-sized enterprises (SMEs), including start-ups.

The partnership, through AGF’s capacity development assistance, will also enable Absa Bank to assist small firms to enhance their managerial capabilities in areas such as governance, human capital management, quality control, packaging, financial management and marketing.

This will help in scaling up SME lending activities in situations where the target clients are unable to meet collateral threshold requirements.

The guaranteed line of up to Sh100 million will be in place for five years.

Absa Bank Kenya Managing Director Jeremy Awori said the facility will help reduce poverty and inequality by ensuring SMEs access financing.

“Considering the financing gap experienced by most SMEs due to their risk profile and lack of security, the bank is always exploring innovative ways to mitigate possible risks in this segment and at the same time tap into the huge opportunity within this growth sector and driver of our economy,” he said. AGF Group Chief Executive Jules Ngankam said the funding will help close the financing gap and boost SMEs.

“Beyond the overall SME scope, our partnership with Absa Bank Kenya will provide particular support to women entrepreneurs and SME businesses qualifying as green transactions. This is in line with our commitment to reducing the $42 billion (Sh4.78 trillion) gender financing gap facing women in Africa,” said Ngankam.

He said AGF will support Absa’s “Let’s Unite to See Her Empowered” initiative which targets to reach out to 600 Women-led enterprises.