NASIRA guarantee programme allows mobilisation of local bank funding to alternative lenders Liwwa and Sanadcom
FMO and Capital Bank of Jordan today announced the signing of a USD 20 mln NASIRA guarantee programme. This guarantee is earmarked for MSME loans to COVID-19-affected and young entrepreneurs, to be originated by companies lending to small businesses in Jordan: United Liwwa for SME Financing (Liwwa) and Sanadcom.
This is a landmark transaction in the MENA region, allowing alternative MSME lenders Liwwa and Sanadcom to access sustainable funding through a local tier 1 bank. It mobilises larger volumes of local funds that would otherwise not get to these alternative lenders.
The NASIRA programme is a risk-sharing facility for local financial institutions supported by the European Union (European Fund for Sustainable Development (EFSD) and MASSIF, the financial inclusion fund FMO manages on behalf of the Dutch government. It is a new way of unlocking support to underserved segments, specifically young, female, migrant, and COVID-19-affected entrepreneurs, groups that often remain underbanked due to high risks - both perceived and real involving absence of collateral and credit history, among others. The NASIRA guarantee programme takes away this hurdle by agreeing in advance to share possible credit losses.
Capital Bank of Jordan is part of Capital Bank Group, one of the largest banking institutions operating in the Jordanian and regional markets servicing corporate, SME and retail clients. With an increasing focus on the SME segment since its inception in 1995, the bank has a binary strategy whereby it serves the well-established medium to larger SMEs directly, and the smaller enterprises by means of partnerships with local Fintechs and other alternative SME lenders as a way of reaching out to all layers of the MSME ecosystem.
To support and strengthen Capital Bank of Jordan’s efforts to reach the underserved MSMEs, FMO will provide a NASIRA loan portfolio guarantee covering loans provided to young and COVID-19-affected entrepreneurs. The underlying loans will be used for income-generating activities.
Speaking about the guarantee programme, Financial Institutions Director at Capital Bank Jamal AlQudah said: “As a leader in the field of SME financing, Capital Bank has a deep understanding of the important role played by the sector in the national economy, we express our gratitude to FMO and the European Commission for their support. this funding, which will bolster the sector in the wake of the exceptional circumstances brought about by the coronavirus pandemic, will allow companies to maintain their liquidity and remain financially agile. This will, in turn, lead to sustainable development through private-sector growth and employment opportunities.”
EU Ambassador to Jordan Maria Hadjitheodosiou said: “The European Union is very pleased with this transaction between FMO and the Capital Bank of Jordan, with the support of the guarantee provided by the European Fund for Sustainable Development. Our excellent cooperation with FMO under their flagship initiative NASIRA, helps promoting and supporting financial inclusion, not only in Jordan but also in other countries in the region.“
Huib-Jan de Ruijter, Chief Investment Officer at FMO, added: “With the guarantee programme to Capital Bank of Jordan we aim to unlock funds to support MSMEs. At the same time, by covering Liwwa and Sanadcom's portfolio with the NASIRA programme, we intend to contribute to the growth of a sustainable local financial ecosystem and mobilise local savings. Our partnership with the European Union is what makes this possible.’’
About Capital Bank Group
Capital Bank Group is one of the largest banking institutions operating in the Jordanian and regional markets, with assets of 4 billion Jordanian Dinars, while the total rights of its shareholders amount to nearly 400 million Jordanian Dinars.Capital Bank Group includes Capital Bank, which was established in 1995, and since then, its business has grown to become one of the leading Jordanian banks specialized in providing integrated packages of investment and commercial banking solutions and services designed to meet the requirements of corporate and individual customers alike. In 2005, Capital Bank (Jordan) purchased the majority of the shares of the National Bank of Iraq (61.85%), which enabled the Bank to develop its products and services, enhance its foothold and financial inclusion at the Iraq level, support export activities, and provide all services to Jordanian companies operating in Iraq. The National Bank of Iraq recently obtained the necessary approvals to establish a branch in Saudi Arabia. Meanwhile, Capital Investments, a wholly owned subsidiary of Capital Bank, established in 2006, provides specialized investment banking services to its customers through its offices in Jordan and UAE/ Dubai International Financial Center (DIFC). Towards the end of 2020, and in fulfillment of its expansion plans, Capital Bank Group acquired the operations of the Lebanese Bank Audi in Jordan and Iraq, where the branches of Capital Bank increased to 28, and the National Bank of Iraq to 18. For more information, please visit Capital Bank website: www.capitalbank.jo
NASIRA is an innovative financial programme that supports young, female, and migrant entrepreneurs in Sub-Saharan Africa and countries neighboring Europe. As of April 2020, the scope is widened to also reach small COVID-19 affected entrepreneurs in the same regions. NASIRA uses guarantees to allow local banks to on-lend to underserved entrepreneurs. The goal is to allow local banks to provide loans to groups they normally perceive as too risky. By so-called ‘risk-sharing’ NASIRA reduces the perceived and real risks of lending to vulnerable and underserved parts of the population. The NASIRA guarantee is part of the EU External Investment Plan, which, by investing €5.1 billion in EU funds, is set to leverage more than €50 billion in total investment from the public and private sector. It will enable small business owners to access affordable loans through local banks, microfinance institutions and other non-banking financial institutions. For more information, please visit: http://www.nasira.info/
For more information, journalists are welcome to contact:
Capital Bank of Jordan | email@example.com | T +962 6 5100200
FMO | Monica Beek | firstname.lastname@example.org | T +31 70 314 9357