Sidian Bank, FMO unveil Ksh.1.6B credit program for MSME support

Sidian Bank, a local bank with a focus on SMEs, has signed a Ksh.1.65 billion (USD 15 Million) loan portfolio guarantee expected to strengthen its ability to provide financing to MSMEs affected by the COVID-19 crisis in Kenya.

The facility is under a risk-sharing facility dubbed NASIRA program supported by the European Union and MASSIF, the financial inclusion fund FMO manages on behalf of the Dutch government.

It is a new way of unlocking support to underserved segments: youth, women and COVID-19 affected entrepreneurs. The NASIRA target groups often remain underbanked due to high risks - both perceived and real - involved in lending to them.

The guarantee program takes away the hurdle of absence of collateral and credit history by agreeing in advance to share possible credit losses.

Henriette Geiger, EU ambassador to Kenya, welcomed the agreement saying improved access to financial products and services would strengthen MSMEs in Kenya.

“We are happy to see FMO and Sidian Bank benefitting from the policies of the European Union, strengthening the MSME’s in Kenya, with a focus on young and female entrepreneurs. We expect to see MSME’s thrive through the improved access to financial products and services," said the Ambassador.

Mr. Chege Thumbi, CEO of Sidian Bank said the guarantee facility and technical assistance program will enable the bank to support its clients, in particular, young and female business owners to meet their growth potential.

“Sidian Bank is excited to partner with FMO on this NASIRA program, by allowing customers who have a shortfall on security required for credit facilities to access much-needed credit. This FMO has made a positive impact through their investment programs globally, and we are privileged to have their support,” he said.

Huib-Jan de Ruijter, chief investment officer at FMO said: “We see a true focus in Sidian Bank on the lower SME segment, serving these small entrepreneurs with an increasing bank product offering tailored to meet MSME’s needs. We are very happy we can support Sidian Bank in developing this segment within the bank even further with the Nasira Guarantee.”

A technical assistance program will be offered alongside the guarantee to support Sidian Bank in building staff capacities and developing financial and non-financial service for the NASIRA target groups in particular those active in the agricultural sector.