Capital Bank of Jordan and the Dutch entrepreneurial development bank (FMO) announced the signing of a USD20 million NASIRA guarantee program.
This guarantee is earmarked for MSME loans to COVID-19-affected and young entrepreneurs, to be originated by companies lending to small businesses in Jordan, United Liwwa for SME Financing (Liwwa) and Sanadcom.
This is a landmark transaction in the MENA region, allowing alternative MSME lenders; Liwwa and Sanadcom to access sustainable funding through a local tier 1 bank. It mobilises larger volumes of local funds that would otherwise not get to these alternative lenders.
The NASIRA programme is a risk-sharing facility for local financial institutions supported by the European Union (European Fund for Sustainable Development (EFSD)) 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, specifically young, female, migrant, and COVID-19-affected entrepreneurs, groups that often remain underbanked due to high risks – both perceived and real involving absence of collateral and credit history, among others. The NASIRA guarantee program takes away this hurdle by agreeing in advance to share possible credit losses.
To support and strengthen Capital Bank of Jordan’s efforts to reach the underserved MSMEs, FMO will provide a NASIRA loan portfolio guarantee covering loans provided to young and COVID-19-affected entrepreneurs. The underlying loans will be used for income-generating activities.
SOURCE: INDEPENDENT PRESS AGENCY