Entrepreneur's Corner

African Guarantee Fund Makes Great Strides In Unlocking Financing For Africa’s Entrepreneurs

BY Soko Directory Team · November 21, 2023 11:11 am

In recent years, Africa has emerged as a dynamic hub for entrepreneurship, with a growing number of innovative businesses seeking to address the continent’s challenges and opportunities.

The World Bank estimates that small businesses represent 90 percent of all businesses in Africa, and according to MasterCard, Sub-Saharan Africa alone has 44 million micro, small, and medium enterprises (MSMEs), employing at least 80 percent of the population and contributing about 40% to the GPD.

However, access to finance remains a significant obstacle for many African entrepreneurs, hindering their ability to realize their full potential. This is where the African Guarantee Fund (AGF) plays a crucial role.

Established in 2011, the AGF is a pan-African financial institution that provides credit guarantees to financial institutions, enabling them to lend to small and medium-sized enterprises (SMEs) that would otherwise struggle to access financing.

By reducing the perceived risk associated with lending to SMEs, AGF has helped to unlock billions of more than USD 3.5 billion in financing for African businesses, driving economic growth and job creation across the continent.

AGF’s Impact in Africa

AGF’s impact on Africa is evident in the numerous success stories of SMEs that have benefited from its credit guarantees. Across the continent, AGF has supported over 30,000 small businesses across 40 countries through 200 PFIs.

Beyond its risk-sharing mechanism that increases financing of SMEs, AGF also provides Capacity Development assistance to its Partner Financial Institutions and the beneficiary SMEs. This enables the lenders to address technical gaps and thereby bring their SME portfolio to scale. Beneficiary SMEs are also supported through pieces of training by Business Development Service providers.

The Ecobank-AGF Deal

Small and medium enterprises in Kenya, Uganda, Tanzania, Rwanda, and 23 other African countries will soon be able to access cheaper, unsecured loans from Ecobank after it signed a new $200 million risk-sharing deal with the African Guarantee Fund (AGF).

The partnership is aimed at catalyzing economic growth and supporting entrepreneurial ventures – including women-owned SMEs on the continent. The two organizations signed a strategic partnership agreement Thursday on the sidelines of the Africa Financial Industry Summit in Lomé, Togo, in the presence of their respective leaders.

The $200m risk-sharing agreement marks the third renewal of Ecobank’s partnership with AGF. The initial guarantee, provided by AGF in 2013, covered seven countries with a total guaranteed portfolio of $50m.

The AGF’s Women Advancement Program

Recognizing the critical role of women in Africa’s economic development, AGF in partnership with the African Development Bank’s Affirmative Finance Action for Women in Africa launched the AFAWA Finance Series in 2022. The AFAWA Finance Series is a series of high-level conferences that brings stakeholders together to discuss solutions and policies to address the financing gap facing African women entrepreneurs.

AFAWA (Affirmative Finance Action for Women in Africa) is a pan-African initiative to bridge the $42 billion financing gap facing women in Africa.

The Need for Africa’s Entrepreneurs to Rise

As Africa continues to urbanize and its population grows, the need for entrepreneurship to drive economic growth and create jobs has never been greater.

The organization’s work is helping to unleash the entrepreneurial potential of Africa’s youth and women, paving the way for a more prosperous and equitable future for the continent.

African Guarantee Fund is a driving force behind Africa’s entrepreneurial revolution. By providing access to finance, training, and networking opportunities, the AGF is empowering African entrepreneurs to turn their ideas into reality and create a brighter future for themselves, their families, and their communities. The organization’s work is a testament to the power of entrepreneurship to transform societies and build a more prosperous Africa.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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