New Equity Group, IFC deal to drive jobs in agriculture, creative economy

Equity Group and International Finance Corporation (IFC), the private sector arm of World Bank Group, have signed a major partnership agreement aimed at accelerating job creation across Africa through investments in agriculture, micro, small and medium enterprises (MSMEs), and the creative economy. The partnership, unveiled on the sidelines of the Africa CEO Forum in Kigali on May 13, combines Equity Group’s regional banking reach with IFC’s financing, technical expertise and global networks to support private sector-led development across the continent. Focus on jobs and key growth sectors Speaking during the signing, Equity Group Managing Director and CEO, Dr. James Mwangi, said the partnership is centred on creating jobs for Africa’s growing population, especially young people. ALSO READ: Equity Group records historic results, with profit surging 55% to Kshs 75.5 billion The agreement will focus on three strategic sectors: agriculture, SMEs and the creative economy. The partnership is expected to help Equity leverage its commercial banking operations, social programmes and sustainability agenda to finance and develop value chains across Africa, while IFC provides financing support, guarantees, technical assistance and access to global expertise. The expected outcome, according to the signatories, is a transformed Africa measured by jobs created. Ensuring agriculture gets a fair share of bank lending Agriculture emerged as one of the partnership’s key priorities because of its contribution to African economies, export earnings and livelihoods, despite remaining underfunded by commercial banks. Equity Group, he said, is committed to adequately financing agriculture to enhance the prosperity of farmers and other value chain actors, while also driving the sector’s overall growth and transformation. “An average bank in Africa has only 3 per cent of loan book in agriculture. We have set ourselves a target of 30 per cent of our entire loan book being in agriculture by 2030,” Mwangi said. “We have set this target because of recognising that agriculture contributes 30 per cent of the GDP of most African economies, provide about 45 per cent of all foreign exchange earnings for most African countries, and provide livelihoods to about 70 per cent of the population.” The partnership seeks to close the agriculture financing gap by combining technology, farmer aggregation models and IFC-backed guarantees to help farmers access affordable credit and improve productivity. Mwangi said Equity has committed its entire $16 billion balance sheet to support the initiative. On the expected impact in the agriculture sector, Mwangi said the target is to increase farmers’ productivity and returns by 40 per cent. He underscored the need for value addition and premium branding to raise farmer earnings. Technology-driven financing for farmers IFC Vice President for Africa Ethiopis Tafara said technology will play a central role in helping smallholder farmers access financing. He explained that IFC is already working with ag-tech companies that use geospatial mapping and data analysis to identify farmers’ needs, including seeds, fertiliser and mechanisation. “These ag techs work with these farmers, collect data, make that data available to banking institutions, who on the strength of this better data are more inclined to lending, and we incentivise them by providing guarantees and risk-sharing facilities,” Tafara said. According to him, the model has already delivered strong results in Senegal and Morocco. “We've seen this model result, as you say, in increased productivity and increased revenues for farmers at 20 per cent, 30 per cent, 40 per cent,” he said. He added that aggregating farmers into organised groups makes them more attractive to lenders. “Each individual smallholder farmer would struggle to get financing. But as a group, it's much more interesting for financial institutions,” Tafara said. Creative economy and digital innovation The creative economy was also included in the agreement as a strategic sector for future job creation. Mwangi cited an initiative called African Creative Economy Transformation Agenda, which aims to create opportunities for young Africans beyond traditional industries. “The goal is to create jobs for youth without taking them to traditional sectors. We will take them to modern economies,” he said. He pointed to Rwanda’s digital public infrastructure, including digital IDs, payment systems and citizen platforms, as examples of innovations that can support Africa’s digital and creative economy ambitions. Longstanding partnership Mwangi said the agreement builds on a longstanding relationship between Equity Group and IFC. “This is one of many agreements we have signed with IFC. IFC is a 7 per cent shareholder of the Equity Group,” he said. He added that IFC has already provided Equity with approximately $400 million in loan facilities and partnered with the bank on several development projects. For IFC, Tafara said Equity was selected because of shared priorities around sustainability, development impact and climate resilience. “So, we chose Equity Bank because it's a long-standing partner that is very like-minded in how it approaches business,” Tafara said. “It seems like a natural partner for us as we look to scale what we are doing to address the job creation need on the continent.” Expected impact The partnership is expected to expand financing for farmers and SMEs, strengthen agricultural value chains, improve financial inclusion and create jobs across Africa. “But when we combine that unique brand of Equity with IFC, then we can go very far, and we can be the catalyst of transformation of the continent to give a solution to the youth,” Mwangi said.

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New Equity Group, IFC deal to drive jobs in agriculture, creative economy