EAC, Equity Bank $13 billion deal to promote trade, integration

Equity Group CEO James Mwangi and the East African Community Secretary-General Peter Mathuki at the EAC headquarters in Arusha, Tanzania, on July 21, 2022, after signing a memorandum of understanding on financing SMEs. PHOTO | POOL

By JACKSON MUTINDA

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Regional lender Equity is seeking to piggyback on the protocols of the East African Community to implement its ambitious Africa Resilience and Recovery Plan which targets small businesses in East Africa.

On Thursday, the bank signed a memorandum of understanding with the EAC, on the sidelines of the 21st Ordinary Heads of State Summit, to help fast-track the plan. Equity Group CEO James Mwangi and EAC Secretary-General Peter Mathuki said the MoU is a vehicle for financial support and development financing using the infrastructure of the Common Market.

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It targets farmers, manufacturers, energy and social services providers and aims to stimulate intra-continental trade, something the bloc says is pursuing.

Equity is making available a part of its $13 billion balance sheet for the region’s entrepreneurs while development financiers International Finance Corporation, African Development Bank and European lenders are to bring in more for lending.

Mr Mwangi said at the signing ceremony in Arusha that the $2 billion is already available for borrowers.

The plan will cover agriculture, extractives, social and environmental transformation and technology. Of the money available for lending, Food and agriculture will take 30 percent and manufacturing 15 percent.

Mr Mwangi noted that the EAC is the best integrated and connected economic bloc in Africa, and therefore a good vehicle to help African businesses supply the world markets, which have been hit by disruptions blamed on Covid-19 and the war in Ukraine.

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“The world is looking for an alternative manufacturing hub and the memorandum we have signed is to allow the business community to operate within the framework of the EAC protocols. We want to operate in a common infrastructural and governance structure to be able to supply the global market. Essentially, we are saying let’s bring equity for everyone and we come together under the Common Market,” Mr Mwangi said.

Noting that in 1960 Congo and Nigeria produced 90 percent of the world’s palm oil for making edible oil, which has been in short supply, Equity will be looking to fund farmers in the region to produce it for the global market.

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Dr Mathuki welcomed the plan, saying it promises to bring about African solutions to African problems.

“Let’s not over-depend on foreign suppliers with all these shocks. We appreciate the private sector’s participation in the region’s economic recovery,” he said.

Mr Mwangi noted that the region should start supplying global markets with raw materials for the production of cooking oil, food, electric cars, protective gear against Covid -19 and other things.

“We felt that East Africa as an agricultural region can supply the world with food and energy. We are organised and coordinated under the EAC and taking advantage of the opportunity. We are seeking to work together to prepare,” Mwangi said.

Under the ambitious plan, Equity Bank is seeking to finance African farmers to use 60 percent of its arable land to produce food to plug the widening supply gaps partly caused by the war in Ukraine.

The plan also covers climate resilience, with the lender advocating more use of electric cars and clean energy.

“Africa can lead the world in resolving the climate change challenge by producing electric vehicle solutions through value addition of its mineral resources and manufacturing strategy,” said Mr Mwangi.

“Agro-processing would significantly enhance manufacturing scale leading to industrialisation. Productivity gains and value creation in the primary sectors of agriculture and mining could propel and enhance investment and trade.”

*Story updated on July 23.