FMO and Sidian Bank today announce the signing of a USD 15 million NASIRA loan portfolio guarantee. This facility under the NASIRA program, will strengthen Sidian Bank’s ability to provide financing to MSMEs affected by the COVID-19 crisis in Kenya. A minimum of 30 percent of the total guarantee facility will be allocated specifically to young and female entrepreneurs. The guarantee will be provided in a Kenyan Shilling equivalent.
The NASIRA program is a risk sharing facility for local financial institutions, supported by the European Union 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: youth, migrant, women and COVID-19 affected entrepreneurs.
The NASIRA target groups often remain underbanked due to high risks - both perceived and real - involved in lending to them. This is, amongst others, due to absence of collateral and credit history. The guarantee program takes away this hurdle, by agreeing in advance to share possible credit losses. A technical assistance program will be offered alongside the guarantee to support Sidian Bank in building staff capacities and developing financial and non-financial service for the NASIRA target groups in particular those active in the agricultural sector.
Henriette Geiger, EU ambassador to Kenya, said: "We are happy to see FMO and Sidian Bank benefitting from the policies of the European Union, strengthening the MSME’s in Kenya, with a focus on young and female entrepreneurs. We expect to see MSME’s thrive through the improved access to financial products and services. This is not only mitigating market uncertainties created by the COVID-19 pandemic, but also, knowing that FMO and Sidian will promote the transfer of knowledge and skills, is having a positive social and environmental impact.’’
Mr. Chege Thumbi, CEO of Sidian Bank said: “Sidian Bank is excited to partner with FMO on this NASIRA program, by allowing customers who have a shortfall on security required for credit facilities to access much needed credit. This guarantee facility and technical assistance program will enable the bank to support our clients, in particular, young and female business owners to meet their growth potential. FMO has made a positive impact through their investment programs globally, and we are privileged to have their support.”
Huib-Jan de Ruijter, chief investment officer at FMO: “We see a true focus in Sidian Bank on the lower SME segment, serving these small entrepreneurs with an increasing bank product offering tailored to meet MSME’s needs. We are very happy we can support Sidian Bank in developing this segment within the bank even further with the Nasira Guarantee.”
About SIDIAN BANK
Sidian Bank is a full-service commercial bank providing an array of financial services to individuals and enterprises. The bank, formerly known as K-rep Bank has been a leading player in Kenya’s enterprise banking sector. Sidian Bank’s mission is to create wealth through provision of transformational financial solutions that meet entrepreneurs’ needs and facilitate growth through convenience and choice. The bank has a network of 42 branches representing most counties as well as a strong digital platform offering mobile and internet banking.
NASIRA is an innovative financial programme that supports young, female, and migrant entrepreneurs in Sub-Saharan Africa and countries neighbouring 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/