Equity group launches USD 6 billion Regional Recovery and Resilience Stimulus Plan

Equity Group has launched a Ks 678 billion private sector stimulus plan to speed up economic recovery and resilience in Eastern and Central Africa.

The resilience plan is set to help the Eastern and Central African region recover from the devastating effects of the COVID-19 pandemic and will provide capital of up to 2% of the combined Gross Domestic Product (GDP) for economies. The funds will be in the form of medium-term loans and credit facilities that need long-term project and development financing.

At the launch, Equity Group Plc. Managing Director and CEO Dr. James Mwangi said that a total of Ksh 678 billion (USD 6 billion) “will be available to 5 million MSMEs and 25 million individual borrowers for the next 5 years. The plan conceives that the 5 million businesses largely comprising MSMEs will create 50 million jobs, 25 million jobs directly and an equal number of jobs indirectly as the ecosystems of business become more cohesive, connected, and ultimately synergize and grow.”

Dr. Mwangi added that “the recovery plan will have a special focus on youth and women, supporting them to be the primary drivers of creating and expanding opportunities in the real economy. Under the Young Africa Works Initiative in partnership and collaboration with the MasterCard Foundation, the plan will build capacity in young people through financial literacy, entrepreneurship training, and digital literacy. “

“To ensure that no one will be left behind, lending to young people will be complemented with credit guarantee facilities to mitigate default through our credit risk pricing model that has opened inclusive credit access to all. Risk-based credit pricing has enabled us to adopt a transparent, all-inclusive interest rate, at the current average central bank rate that ranges from 13% to 18.5% for the lowest risk and highest risk categories respectively.”

The Regional Development initiative focuses on five main areas which are; primary sectors of Food and Agriculture and extractive sectors, Manufacturing, and Logistics, Trade and Investments, Micro small and medium enterprises, and social impact and environmental investments.

Under Food and Agriculture, the plan aims for agricultural transformation through value chain coordination, capacity building of small farmers, financing mechanization, and credible inputs.

To ensure food security in the region, productivity gains will be unleashed adding value in the sectors, which are the highest employers, highest foreign exchange-earners, and the highest contributors of exports. This will apply to all primary products including mineral processing to export finished products.

The plan will fund in-country manufacturing and regional supply chains to recuperate from the effects of the Covid-19 pandemic on the global supply chain.

To ensure the success of MSMEs, the plan will involve credit risk-sharing mechanisms through financial literacy and entrepreneurship training.

The recovery and resilience plan seeks to utilize the opportunity presented by The African Continental Free Trade Area Agreement (AfCFTA) by signing an implementation and collaboration partnership with the AfCFTA Secretariat to make Equity Group an implementation partner.

Several organizations are in support of the resilience plan including; the International Finance Corporation (IFC), African Development Bank (AfDB), European Development Banks (Team Europe), the Commonwealth Secretariat, the African Continental Free Trade Area Agreement Secretariat, and the European Union.

“We are grateful for the enthusiasm shown towards collaborating and partnering to jointly execute on the social and economic recovery and resilience of Eastern and Central Africa, particularly in mobilizing USD 6 billion in financing for the fund,” said Dr. Mwangi.

Article done by Charity Nyadzua