IFC and Equity Bank enter into Sh2.6 billion risk-sharing agreement to support refugee zones

The International Finance Corporation (IFC) has announced a Sh2.58 billion ($20 million) risk-sharing facility for Equity Bank Kenya to support the financial inclusion of refugees and their host communities.

The World Bank’s private sector lending arm said the facility will increase financial inclusion of individuals and small businesses in Kenya’s most disadvantaged regions, including the Turkana and Garissa refugee hosting areas.

“It is expected that the project will serve as a model for similar initiatives to support the private sector in other African countries hosting large refugee populations. In Africa, there are an estimated 30 million internally displaced persons, refugees and asylum seekers representing almost a third of the world’s refugee population,” the IFC said.

Under the financing arrangement, the IFC will assume 50 percent of the exposure ($10 million) in the risk-sharing facility, which it says will increase access to financing for refugee-owned and operated businesses in Kenya and surrounding host communities.

This initiative is the first to be supported by the Partnership for Improving Prospects for Forcibly Displaced Persons and Host Communities (Prospects), which is investing US$4 million (Sh516.24 million) in the facility.

Prospects is a global partnership that aims to improve access to education, social protection and decent work for host communities and forcibly displaced people.

Equity Group Chief Executive Officer James Mwangi said the funding would help scale up ongoing social impact programs in 14 counties in Kenya.

“The partnership will enable us to scale up our ongoing social impact work in 14 provinces, including Turkana and Garissa, where Kakuma, Kalobeyei and Dadaab refugee camps are located. We hope that this implementation will be a proof of concept that will influence the scale of our refugee-focused initiatives in the rest of our jurisdictions in East and Central Africa.”

As part of the partnership, IFC will also offer a comprehensive advisory services program to enhance Equity Bank Kenya’s micro-lending and non-financial services for target customers.

“This partnership with Equity Bank Kenya highlights how private sector resources can support vulnerable populations, such as refugees and their hosts, giving them a better opportunity to improve their lives and communities and meet their needs,” said Sérgio Pimenta , IFC’s Vice President for Africa. .

The Women Entrepreneurs Finance Initiative (WE-FI), a global multi-partner initiative to improve financing for women-led micro, small and medium enterprises, launched in 2023, also supports the Equity Bank Kenya facility, which has a 40 percent first loss guarantee and a performance-based incentive to promote financing of women-led businesses.

Financial contributors to WE-FI include Australia, Canada, China, Denmark, Germany, Japan, the Netherlands, Norway, the Russian Federation, Saudi Arabia, the Republic of Korea, the United Arab Emirates, the United Kingdom and the United States. .​