Several international financial institutions are mobilising $165 million for Equity Bank Kenya. The Kenyan subsidiary of Equity Group Holdings will use the funds to finance small and medium-sized enterprises (SMEs) and climate-smart projects.
Several financial institutions are mobilising for climate finance in Africa. These include the International Finance Corporation (IFC), the World Bank Group’s subsidiary, the Netherlands Development Finance Corporation (FMO) and British International Investment (BII). These development finance institutions have also partnered with impact investment companies ResponsAbility and Symbiotics to invest $165 million in Equity Bank Kenya.
Of this funding, $50 million is being provided by the IFC and $50 million by the BII. The remaining $65 million in funding is being provided by FMO, ResponsAbility and Symbiotics. With this funding, the Equity Group Holdings subsidiary will provide loans to small and medium-sized enterprises (SMEs) to finance climate-smart projects.
IFC’s entry into Equity Group’s capital
The IFC is taking a 6.71% stake in Equity Group. Equity Group is the largest banking group in the Great Lakes region, with more than $10 billion in assets managed by its 463 branches. The World Bank Group subsidiary invested in the financial services holding company through the IFC Financial Institutions Growth Fund, a fund managed by the IFC Asset Management Company, the IFC’s equity mobilisation division.
“Supporting SMEs and climate-friendly projects is at the heart of IFC’s strategy in Africa to help create jobs, respond to climate change, and take advantage of opportunities in the digital economy. IFC’s deepening partnership with Equity Group reflects this 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 for Risk and Finance.
Moving away from coal financing
According to the IFC, its investment in Equity Group is part of its approach to increasing green equity investments in financial institutions. And in return for the IFC’s funding, the banking group has committed to moving away from coal-related projects.
Also, “Equity Group has agreed to allocate $80 million of equity to climate change across all its subsidiaries over the next five years,” says the IFC. Equity Group’s shareholders also include the Norwegian Investment Fund for Developing Countries (Norfund), the investment company Arise, the Dutch bank Rabobank, etc.
Jean Marie Takouleu