Safaricom #ticker:SCOM and Equity Bank #ticker:EQTY have reached a financing deal enabling the telco’s cash-strapped contractors to access up to Sh200 million unsecured short-term loans to manage cash flow positions ahead of payment.
The deal targeting thousands of Safaricom suppliers, dealers and agents is aimed at creating a “more procurement-ready businesses,” the telco said in a letter to its business partners.
Safaricom had 1,164 suppliers and 440 active dealers in the financial year ended March and 156,000 M-Pesa agents.
“We are pleased to inform you of our partnership with Equity Bank which will offer our partners financing solutions linked to purchase orders and invoices,” Safaricom’s head of supply chain management Francis Murabula said in the letter.
Mr Murabula is seeking permission from Safaricom suppliers, dealers and agents to share purchase order and invoice information as well as contact details to facilitate processing of loans for prospective firms.
The programme will enable contractors to access credit from Equity before or after they deliver on their contracts with Safaricom, boosting their cash flow positions.
Contractors who use unpaid accounts for goods and services already delivered to Safaricom as collateral — stand-alone invoice discounting —will qualify for up to Sh200 million unsecured loan.
The size of the loan to be accessed and terms will be subjected to individual firm’s credit grading.
Businesses which provide information on local purchase orders or contractor financing, bid bonds, performance guarantees, advance payment guarantees and back-to-back letters of credit before they supplying will access a maximum of Sh100,000 loan without security.