Family Bank has secured a Ksh.1.5 billion loan portfolio guarantee facility from the African Guarantee Fund (AGF) for Small and Medium-sized Enterprises (SME).
The facility will target women-owned small businesses and climate-friendly investments.
“Through this credit facility, Family Bank can scale up lending to MSMEs who form over 80% of our customers base. With the gradual recovery of the economy as we contain the effects of the pandemic, we are able to widen our capital base to support more MSMEs by extending credit at favourable terms,” said Family Bank Chief Executive Officer Rebecca Mbithi.
The African Guarantee Fund will provide capacity-development assistance to Family Bank that will be utilized for technical expertise to the MSMEs and expose entrepreneurs to global knowledge on business development and climate-smart ventures through the five-year agreement.
This guarantee agreement will cover funded facilities such as overdrafts, term loans and non-funded facilities such as letters of credit, bank guarantees, among other credit facilities.
“SMEs are very crucial to the achievement of meaningful sustainable development. Their greatest barrier, however, is access to finance. Our loan portfolio guarantee agreement with Family Bank is structured to reduce the perceived risk of SMEs and to solve their holistic needs through Capacity Development assistance. Additionally, this renewed partnership will also focus on empowering women-owned and climate-focused SMEs,” said AGF Group Chief Executive Officer, Jules Ngankam.
Previously, Family Bank has had two loan portfolio agreements with AGF worth Ksh.250 million in 2015 and Ksh.774 million in 2018.
The bank, which prides itself in agri-financing, has laid a foundation for targeting small businesses to increase its loan book to small businesses in Kenya.
On April 4, the lender inked a Ksh.1.1 billion deal with Eco.business to finance agricultural producers in Kenya.
The deal targets key players in the tea sector.
“The Eco.business Fund has disbursed USD 10 million, approximately Ksh.1.1 billion to its newest partner in Kenya, Family Bank, increasing access to finance for sustainable agricultural producers, particularly in the tea sector.” Said Family Bank in a statement.
The new partnership aims to support sustainability-certified companies as well as small-holder farmers implementing sustainable and climate-smart practices, ensuring the long-term competitiveness of the agribusiness sector.
The investment is expected to support the fund’s overall mission to promote business and consumption practices that contribute to biodiversity conservation and climate action (adaptation and mitigation).
It is expected to contribute to the Sustainable Development Goals (SDGs) 2 on Zero Hunger, SDG 8 on Decent Work and Economic Growth, and SDG 12 on Responsible Consumption and Production.
Family Bank is an established lender in the Kenyan tea sector, making it an ideal partner for the fund, With its extensive branch network across the country.
The lender’s pretax profit surged by 131.6 percent to Ksh.3.3 billion for the year ended December 31, 2021.
The growth in earnings was largely driven by an increase in interest income, marginal growth in interest expenses and operating expenses coupled with a reduction in the loan loss provisions.