East African banks have led the way in SME financing in Africa and none more so than Equity Bank. Nigerian banks often struggle to get to a double-digit percentage allocation of their loan books to SMEs. That’s partly due to a less diversified, oil-dependent economy. But even by east African standards, Equity Bank is impressive. Most of its loan book (54%) is with SME clients.
Despite the heavy impact of Covid-19 on SMEs, under chief executive James Mwangi, Equity Bank has continued to support its clients, growing lending by 30% to $4.8 billion in 2020.
Lately, Equity Bank’s SME lending has focused on unsecured working capital financing, with a specific focus on supply chain financing in agriculture, manufacturing, fast-moving consumer foods and healthcare. It has also continued to access credit-risk guarantees as well as senior and subordinated funding from the International Finance Corporation (IFC) and development finance institutions in Europe – arrangements specifically designed for SMEs, including female entrepreneurs and agricultural value chains.
While Equity Bank has been at the forefront of providing funding and technical expertise to micro-entrepreneurs, the bank’s digital foreign currency and cash management solutions are critical for bigger SME clients.
Its EazzyFX platform allows online purchases and sales of foreign currency. Eazzybiz, its SME cash management platform, grew transaction numbers by 21% in 2020. This platform gives clients a unified view of their accounts, payments, collections and receivables and allows clients to make payments and manage cash flow across multiple currencies and locations.
