FMO, the Dutch entrepreneurial development bank, has signed a NASIRA portfolio guarantee for $15m in local currency for its existing customer I&M Bank in Kenya.

The risk-sharing facility will be used for I&M Bank’s MSME portfolio, as it aims to expand its outreach to MSMEs as part of its current iMara strategy.

Huib-Jan de Ruijter, Chief Investment Officer FMO, said: “We’re pleased to once again extend our support to our long-term customer I&M Bank Kenya through a NASIRA portfolio guarantee. The past years have shown how NASIRA  guarantees and accompanying technical assistance can play an important role to reduce inequality by supporting the financing to promising female, young and migrant entrepreneurs in the European Neighbourhood and Sub-Saharan Africa.

“This latest guarantee is perfectly aligned with our strategy, and contributes to SDGs 8 and 10 for Decent Work and Economic Growth, as well as Reduced Inequalities. We look forward to extending our mandate through NASIRA with the opening of the EFSD+ this year, significantly increasing our contribution to inclusive growth, job creation, and sustainable development across a wider range of geographies and sectors.”

The NASIRA program is enabled by the European Union (European Fund for Sustainable Development) and MASSIF, the financial inclusion fund FMO manages on behalf of the Dutch government.

Kenyan MSMEs—in particular youth-and women-owned businesses—are a focal driver of the country’s economy, contributing to over one-third of Kenya’s GDP. However, these entrepreneurs continue to face constrains in  accessing financial services. 

A long-standing client of FMO, I&M Bank Kenya is a wholly-owned subsidiary of I&M Group.

I&M Bank Kenya has been a customer of FMO since 2010. The bank has primarily focused on supporting traditional corporate clients. As part of the bank’s strategy, I&M Bank will increase access to finance to (M)SMEs across the country, while also providing digital solutions such as FinTech partnerships for a smooth transition.

The NASIRA guarantee will foster financial inclusion, helping both banked and unbanked MSMEs that have been hit by COVID-19. The NASIRA program is an innovative financial program aimed at underserved entrepreneur segments in Sub-Saharan Africa and countries neighboring Europe. In particular, NASIRA focuses on groups such as young, female, migrant, and COVID-19-affected workers who have often remained underbanked because of both perceived and real risks (such as lack of collateral and credit history). Through the risk-sharing facility, NASIRA reduces these risk local financial institutions face and eliminates the hurdle by offering to share future credit losses, allowing granting much-needed financing for microenterprises and SMEs.

The NASIRA facility will also include Capacity Development and Technical Assistance support through non-financial services such as business digitization, enhancing MSME lending practices, financial literacy, and more.

Kihara Maina, CEO of I&M Bank, Kenya noted, “I&M Bank anchors its business model on empowering prosperity for all its stakeholders. We strongly believe that the guarantee from FMO will help our (M)SME clients accelerate their business growth and support their expansion efforts, while providing support to those clients negatively impacted by COVID-19.”

Henriette Geiger, the EU Ambassador to Kenya, added: “We are delighted to see the expansion of financial access to underserved entrepreneurs in Kenya through the deployment of NASIRA guarantee signed between the European Commission and FMO in 2019 under the the European Fund for Sustainable Development (EFSD). Many entrepreneurs and MSMEs have been negatively affected by Covid-19 and NASIRA guarantee is helping to de-risk lending to underserved entrepreneur segments such as young, female, migrant, and COVID-19-affected workers.”