The French Development Agency (AFD) is to provide about $30 million through its African Guarantee Fund (AGF) for Small and Medium-Sized Enterprises.
The fund is meant to help improve access to credit to small and medium-sized enterprises (SMEs) throughout Africa.
The sub-participation agreement of the $30 million funds was signed by Mr Rémy Rioux, AFD Chief Executive Officer and Mr Félix Bikpo, AGF Group Chief Executive.
The agreement signed between AFD and AGF broadens the existing cooperation between the two entities, by providing AGF with a counter-guarantee of $30 million, using the ARIZ risk-sharing mechanism which is a support for the risk of financing private investment.
The risk-sharing mechanism is in a final loss guarantee offered to financial institutions by AFD to cover 50 per cent to 75 per cent of an individual loan or a loan portfolio for microfinance institutions (MFIs) and SMEs.
The counter-guarantee will enable AGF to extend guarantees of $60 million to local financial institutions, hence allowing the latter to lend a total of $120 million to SMEs in Africa. It is estimated that such an amount of loans will benefit 1,800 SMEs and support 5,400 jobs.
During the event, special emphasis was made on increasing African women’s access to finance through the Affirmative Finance Action for Women in Africa (AFAWA) an initiative that will be implemented through AGF.
AFAWA was officially launched at the Global Gender Summit having already received a commitment from France’s government during the Biarritz Summit in August 2019.
African Guarantee Fund (AGF) is a non-bank financial institution whose objective is to promote economic development, reduce poverty and increase employment in Africa by providing financial institutions with guarantee products and capacity development assistance specifically intended to support African SMEs.
It was founded by the government of Spain through the Spanish Agency for International Cooperation and Development (AECID), the government of Denmark through the Danish International Development Agency (DANIDA) and the African Development Bank (AfDB).
The French Development Agency Group funds support and accelerate the transition to a fairer and more sustainable world focusing on education, climate, health, biodiversity, peace, urban development and governance.
The entity carries out more than 4,000 projects in France’s overseas departments.
Source: The Exchange