MOU

Equity enlists AfCFTA in Africa Covid recovery plan

Equity plans to finance at least five million micro, MSMEs and 25 million vulnerable households.

In Summary

•The new agreement between the lender and AfCFTA Secretariat is expected to deepen the economic integration with focus on Equity's six  key pillars including formalising extractive value chains.

•Equity, through its regional banking subsidiaries, plans to finance at least five million micro, MSMEs and 25 million vulnerable households.

Equity Group CEO James Mwangi, and AfCFTA secretary general Wamkele Mene display signed partnership agreement documents at the margins of the 41st Ordinary Session of the Executive Council of the African Union during the official launch of a partnership that will deepen the economic integration of the African continent.
Equity Group CEO James Mwangi, and AfCFTA secretary general Wamkele Mene display signed partnership agreement documents at the margins of the 41st Ordinary Session of the Executive Council of the African Union during the official launch of a partnership that will deepen the economic integration of the African continent.
Image: HANDOUT

Equity Bank has engaged the African Continental Free Trade Area (AfCFTA) in its $6 million (Sh678 billion) post-Covid recovery plan. 

Equity, through its regional banking subsidiaries, plans to finance at least five million micro, small and medium sized businesses (MSMEs) and 25 million vulnerable households.

Through the `Africa Recovery and Resilience Plan’, the lender hopes  to create at least 50 million direct and indirect jobs by 2025 through its private-sector driven plan.

The plan had gained $1.5 billion (Sh117.7 billion) external funding by May 12 from ten development banks including AfDB, European Development Banks the Commonwealth Secretariat.

The new agreement between the lender and AfCFTA Secretariat is expected to deepen the economic integration with focus on Equity's six  key pillars including formalising extractive value chains.

Other priorities in Equity's resilience plan is food and agriculture, extractives, manufacturing and logistics, trade and investments, social impact, health and environmental investments.

The two institutions will work on implementing the AfCFTA Private Sector Strategy which seeks to catalyse a natural resources-led transformation of Africa,  enhance agriculture output and connect the primary sectors to global supply chains.

African countries officially began trading under the AfCFTA bloc at the beginning of 2021. It aims to bring together 1.3 billion people in a $3.4 trillion economic bloc.

The AfCFTA is the largest free trade area since the establishment of the World Trade Organisation and economists say the trade zone could lift tens of millions out of poverty over the next 15 years.

Speaking during the signing of the MOU, Equity Group managing director  James Mwangi noted that the AfCFTA provides unparalleled growth opportunities to  SMEs, making trade and cross-border scaling a possibility for all eligible and interested businesses.

"Today’s signing with the African Continental Free Trade Area Secretariat is a significant moment for recovery and resilience of the African continent and for the creation of wealth for our people," Mwangi said.

AfCFTA  secretary general Wamkele Mene said, "the AfCFTA will ensure the continent is well positioned to overcome crises such as Covid-19 leveraging on the framework of the AfCFTA Agreement."

He added that Equity will utilise tools of the AfCFTA Agreement to create additional private sector lending with an envisaged loan book to be directed to agriculture (30%), manufacturing (15%) and the majority to MSMEs (65%).

Small and Medium Enterprises in Kenya continue to struggle from the Covid-19 impact. With little or no financial support, most have closed shop while others are struggling to break even.

Kenya National Bureau of Statistics (KNBS) data shows that about 400,000 Micro, have  been dying within the first year of inception, in the last five years, raising concern over sustainability of this critical sector.