East Africa’s leading Investment Company, Centum, has entered into partnership with Sidian Bank and FMO to help finance MSMEs through USD15 million NASIRA loan portfolio guarantee which will see 30 percent of the total guarantee facility allocated specifically to the youth and women owned enterprises.
The NASIRA program is a risk sharing facility for local financial institutions, 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, migrant, women and COVID-19 affected entrepreneurs.
NASIRA uses guarantees to allow local banks to on-lend to underserved entrepreneurs. The goal is to allow local banks to provide loans to groups they normally perceive as too risky. By so-called ‘risk-sharing’ NASIRA reduces the perceived and real risks of lending to vulnerable and underserved parts of the population. The NASIRA guarantee is part of the EU External Investment Plan, which, by investing €5.1 billion in EU funds, is set to leverage more than €50 billion in total investment from the public and private sector. It will enable small business owners to access affordable loans through local banks, microfinance institutions and other non-banking financial institutions.
The NASIRA target groups often remain underbanked due to high risks – both perceived and real – involved in lending to them. This is, amongst others, due to absence of collateral and credit history. The guarantee program takes away this hurdle, by agreeing in advance to share possible credit losses. A technical assistance program will be offered alongside the guarantee to support Centum Re and 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.
Centum has over the years provided the channel through which investors access and build extra-ordinary enterprises in Africa.
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