Financial institutions partner to expand green funding in Africa
IFC and Equity Group Holdings Plc. today announced they are expanding their partnership to support the sustainable development of Africa by increasing access to financial services for small businesses and funding for green projects in six countries across Eastern and Central Africa.
IFC’s backing, along with that of partners British International Investment, FMO, Symbiotics and ResponsAbility, will support Equity Group to deliver on its $6 billion ‘Africa Recovery and Resilience Plan’ to finance five million businesses and 25 million households to create 50 million jobs both directly and indirectly in Kenya, DRC, Uganda, Rwanda, Tanzania and South Sudan.
The backing is underpinned by:
- IFC and the IFC Financial Institutions Growth Fund acquired a 6.71% stake in Equity Group, East Africa’s largest banking group. The investment is IFC’s first in Africa that aligns with IFC’s approach to increasing green equity investments in financial institutions. Through this equity investment, Equity Group commits to zero lending for coal-related projects. Further, Equity Group Holdings has agreed to allocate $80 million equity towards climate covering all subsidiaries over the next five years.
- As part of IFC and Equity Group’s expanded partnership, IFC, along with partners, is also providing a loan to Equity Bank Kenya to support lending to small and medium-sized enterprises and will focus especially on supporting climate-smart projects, which are developing solutions to help address the climate emergency. The $165 million subordinated loan to Equity Bank Kenya includes $50 million from IFC, $50 million from BII, and $65 million from Symbiotics, ResponsAbIility, and the Dutch entrepreneurial development bank, FMO, a long-time shareholder in Equity through Arise Investments.
“With IFC’s reach, we will be able to further advance economic development by empowering and catalysing the transformation of the lives and livelihoods of the African people and will enhance the success and sustainability of Equity’s ‘Africa Recovery and Resilience Plan’,” said Dr James Mwangi, Equity Group Managing Director and CEO.
“Supporting small businesses and climate-friendly projects is central to IFC’s strategy in Africa to help create jobs, respond to climate change and leverage the opportunities afforded by the digital economy. IFC’s deepening partnership with Equity Group reflects that strategy and will support economic growth in Africa as the continent recovers from the effects of the COVID-19 pandemic,” said Mohamed Gouled, IFC’s Vice President of Risk and Finance.
“This investment will further increase working capital for more local businesses and help to fund climate eligible projects in Kenya,” said Seema Dhanani, Head of Office Kenya & Coverage Director, East Africa, BII.
This is the second facility which IFC has entered into with Equity Group Holdings in the past year, with the first being a $50 million loan to Equity BCDC (Equity’s subsidiary in the DRC) in Congolese francs that is helping the bank to provide additional local currency loans to underserved micro, small and medium-sized businesses in the DRC.