NIC Bank Kenya has today signed a Loan Portfolio Guarantee agreement amounting to KES 515,900,000 with the African Guarantee Fund for Small and Medium-sized Enterprises (SMEs). The partnership aims to unlock financing intended to facilitate the promotion, growth and development of Small and Medium-sized Enterprises (SMEs). The signing ceremony took place at the NIC Bank headquarter offices in Nairobi.
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 employ approximately 14.9 million Kenyans and contribute an estimated 28% of Kenya’s Gross Domestic Product. However, the majority of SMEs in Kenya do not get to celebrate their third anniversary because 46% collapse within their first year while approximately 400,000 die within their 2nd anniversary. Source (Kenya National Bureau of Statistics).
The partnership between NIC Bank and AGF is, therefore, a strategic move that will enable SME customers seeking Trade Financing, overcome the financing barrier. The loan portfolio guarantee facility will see AGF share the risks envisioned by the bank in situations where the target SME clients are unable to meet collateral threshold requirements.
AGF’s objective is to provide partial credit guarantees and capacity development to financial institutions to stimulate financing of SMEs thereby unlocking their potential to deliver exclusive growth in the continent. AGF Group Deputy Chief Executive Officer, Mr. Jules Ngankam while speaking during the signing ceremony said: “With this partnership, we are going to increase access to finance for more 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 their potential to spur the growth of this country.”
Speaking at the signing ceremony, Mr. Ellie Chiuri the Corporate Director at NIC Bank reaffirmed the banks position in striving to be the leader in offering financing solutions backed by uniquely competent trade and relationship management experts, wide correspondent banking network and a unique ability to handle risk management.
“We support our Trade Finance customers with innovative products and services and specialist expertise in sectors like Agribusiness, Manufacturing, Trading, Health, Transport and Communication, Energy, Government and Education. We customize our products and services to meet our clients’ specific account management, payments, collections and liquidity management requirements.”
Sally Chege, the Transactional Banking Deputy Director at NIC Bank also mentioned that the goal of this partnership is centered on supporting the growth of SMEs in their day-to-day financial management needs. The value proposition is to continue offering tailor-made services to our customers and take advantage of our local and regional market and business expertise.
At the same time, Mr. Stephen Gakuya, the Head of SME at NIC Bank reiterated that the partnership between AGF and NIC Bank is a strategic move aimed at unlocking opportunities to spur growth for SMEs.
“We are certain that this partnership will empower SME growth and increase job creation in the country. NIC Bank has a solid track record of promoting SMEs in Kenya and the markets we operate in and therefore with this partnership we are going to increase the number of SMEs we finance and also pay special focus to the youth entrepreneurs, among others to facilitate their growth and in turn the growth of our economy.
“Customers taking this offer will be expected to visit any NIC Bank branch or get in touch with their respective Relationship Managers to be guided on the requirements.