Stanbic Bank Kenya and the African Guarantee Fund for Small & Medium-sized Enterprises (AGF) Tuesday signed a Loan Portfolio Guarantee Facility to increase financing for Small and Medium Enterprises (SMEs) across the country.
The Portfolio Guarantee Facility of Ksh 1 Billion will allow Stanbic Bank Kenya to expand their lending capacity and coverage to SMEs.
The guarantee scheme will be in place for a renewable period of five years and will see the bank provide loans of up to KSh3 million to a single borrower.
Florence Wanja, the head of business and commercial clients at Stanbic Bank Kenya says the guarantee facility will provide a risk mitigation instrument for credit extended to firms engaged in international trade.
“SMEs contribute more than 30 percent of Kenya’s GDP, and close to 50 percent of new jobs created annually, and therefore, our partnership with the African Guarantee Fund is a significant milestone in contributing towards accelerating their growth,” said Florence Wanja, the head of commercial clients at Stanbic.
Speaking on behalf of the African Guarantee Fund, the Group Director of Business Development, Mr. Franck Adjagba said, “Many Kenyan SMEs struggle to access financing due to their perceived higher risk, which has further deteriorated during the Covid-19 pandemic.”
“Reducing this risk will help these businesses access financing required for growth.”
AGF charges banks a fee of between 1.5 percent to three percent for the risk guarantee.