French agency donate Sh3.7bn to support African SMEs2 min read
The African Guarantee Fund (AGF) has received Sh3.7 billion (USD30 million) from the French Development Agency (AFD) to support small and medium sized enterprises (SMEs) in Africa.
The fund seeks to improve access to credit by SMEs throughout Africa besides supporting the risk of financing private investments.
The agreement by the two institutions was signed by AFD Chief Executive Officer Rémy Rioux and AGF Group Chief Executive Officer Félix Bikpo in Paris on November 28, 2019.
Mr Bikpo said the agreement broadened the existing cooperation between the two organisations by providing AGF with a counter-guarantee of USD 30 million, using the ARIZ risk-sharing mechanism and a support for the risk of financing private investments.
“Through its leverage effect, this counter-guarantee will enable AGF to extend guarantees of USD60 million to local financial institutions, thereby allowing the latter to lend a total of USD120 million to African SMEs. It is estimated that such an amount of loans will benefit 1,800 SMEs and support 5,400 jobs,” Mr Bikpo said.
FINANCING FOR WOMEN
After the signing ceremony, Mr Rioux and Mr Bikpo discussed further areas of collaboration in the near future, putting special emphasis on increasing African women’s access to finance through the Affirmative Finance Action for Women in Africa (Afawa) initiative that will be implemented through AGF.
Afawa has already received commitment from the government of France during the Biarritz Summit in August 2019 but AGF and AFD are exploring different modalities of support for the initiative.
African Guarantee Fund is a non-bank financial institution whose objective is to promote economic development, increase employment and reduce poverty in Africa by providing financial institutions with guarantee products and capacity development assistance specifically intended to support SMEs in the continent.