FMO, the Dutch entrepreneurial development bank, has announced the signing of a NASIRA portfolio guarantee for USD 15 million (approx. Ksh.1.7b) for its existing customer I&M Bank, Kenya.
The risk-sharing facility will be used for I&M Bank’s MSME portfolio, as it aims to expand its outreach to MSMEs as part of its current iMara strategy.
The NASIRA program is enabled by the European Union (European Fund for Sustainable Development) and MASSIF, the financial inclusion fund FMO manages on behalf of the Dutch government.
Kenyan MSMEs—in particular youth-and women-owned businesses—are a focal driver of the country’s economy, contributing to over one-third of Kenya’s GDP.
However, these entrepreneurs continue to face constraints in accessing financial services.
I&M Bank Kenya, a wholly-owned subsidiary of I&M Group PLC, is a long-standing customer of FMO since 2010.
As part of the bank’s strategy, I&M Bank will increase access to finance to (M)SMEs across the country, while also providing digital solutions such as FinTech partnerships for a smooth transition.
The NASIRA guarantee will foster financial inclusion, helping both banked and unbanked MSMEs that have been hit by COVID-19.
The NASIRA program is an innovative financial program aimed at underserved entrepreneur segments in Sub-Saharan Africa and countries neighboring Europe.
In particular, NASIRA focuses on groups such as young, female, migrant, and COVID-19-affected workers who have often remained underbanked because of both perceived and real risks (such as lack of collateral and credit history).
Through the risk-sharing facility, NASIRA reduces these risk local financial institutions face and eliminates the hurdle by offering to share future credit losses, allowing granting much-needed financing for microenterprises and SMEs.
Supported by the European Union (European Fund for Sustainable Development) and MASSIF (the financial inclusion fund FMO manages for the Dutch government), the NASIRA facility will also include Capacity Development and Technical Assistance support through non-financial services such as business digitization, enhancing MSME lending practices, financial literacy, and more.
“We’re pleased to once again extend our support to our long-term customer I&M Bank Kenya through a NASIRA portfolio guarantee. The past years have shown how NASIRA guarantees and accompanying technical assistance can play an important role to reduce inequality by supporting the financing to promising female, young and migrant entrepreneurs in the European Neighbourhood and Sub-Saharan Africa, said Huib-Jan de Ruijter, Chief Investment Officer FMO.
“We look forward to extending our mandate through NASIRA with the opening of the EFSD+ this year, significantly increasing our contribution to inclusive growth, job creation, and sustainable development across a wider range of geographies and sectors.”
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