African SMEs set to benefit from USD 74m guarantee
The African Guarantee Fund for Small and Medium-Sized Enterprises (AGF) has entered into a re-guarantee transaction of an amount of up to USD 74 million with GuarantCo, to increase its guarantee capacity for African SME financing.
On the GuarantCo AGF partnership, AGF’s Chief Executive Officer, Felix BIKPO, stated, “AGF is glad to be joined by GuarantCo in bridging the infrastructure financing gap. This partnership aims to put in place an even stronger collaboration that will work on the entire value chain of infrastructure projects in Africa. We are looking forward to supporting other SMEs that work with key players in the infrastructure sector.”
GuarantCo’s Chief Executive Officer, Lasitha PERERA said ,“We are delighted to be able to partner with the African Guarantee Fund and increase support to SMEs active in the infrastructure sector in Africa. This collaboration between two local currency focussed guarantors offers the potential for us to engage local financial institutions and investors in financing the entire value chain in an African infrastructure project.”
The African Guarantee Fund for Small and Medium-Sized Enterprises (AGF) was officially launched on 1st June 2012, as a Pan-African non-bank financial institution founded by the government of Denmark through the Danish International Development Agency (DANIDA), the government of Spain through the Spanish Agency for International Cooperation and Development (AECID) and the African Development Bank (AfDB). Agence Française de Development (AFD) joined AGF in 2015 followed by the Nordic Development Fund (NDF) in 2016.
GuarantCo was established to mobilise local currency investment for infrastructure projects and support the development of financial markets in low income countries. GuarantCo is part of the Private Infrastructure Development Group (74PIDG) and supported by the governments of the UK, Switzerland, Sweden, the Netherlands and Australia and is rated AA- by Fitch and A1 by Moodys.
Meanwhile, the SME’s have a large and growing impact on GDP in emerging markets and are a key source of job creation. Strengthening Africa’s infrastructure is critical for development as it is through this that African countries become more competitive at a global level.
With this increased capacity, AGF will be able to support larger local currency transactions for SMEs involved in infrastructure.
Report made available to Daily Times by Apo revealed that, over the past 6 years, AGF has led the guarantee market in Africa by issuing financial guarantees to a tune of USD 690 million.
This has enabled its partner financial institutions to issue loans estimated at USD 729 million to about 7600 African SMEs. GuarantCo is part of the Private Infrastructure Development Group, (PIDG), and is a global guarantee fund that has issued over USD 900 million of guarantees since inception in 2005 with a mandate to enable local currency finance for infrastructure.
The transaction, according to the report, will enable AGF and GuarantCo to explore further partnership opportunities of working together in contributing towards economic growth in Africa.
Stories by Bonny Amadi
