A pan African non-bank financial institution has partnered with three local banks to empower small and medium sized enterprises (SMEs) in the country.
With the mission of contributing to the economic development and employment creation, African Guarantee Fund (AGF) seeks to provide partial guarantees to financial institutions to facilitate access to finance for SMEs.
AGF offers three types of guarantees namely; loan, resource mobilisation and equity guarantees.
Addressing the media recently, AGF CEO Felix Bikop said through their Fund, they seek to assist SMEs to develop and grow beyond infancy stage, as they are the drivers of the African economy.
“Despite SMEs being the engine of growth in Africa, they usually close shop prematurely due to lack of finance as mostly they do not even have a guarantee to secure a loan from the banks,” he said.
According to Bikop, this usually limits the growth of SMEs and results in the high unemployment rate. He said their strategy is to decentralise their operations across the continent in order to increase their support for SMEs.
Any SME can apply for the
“We do not have a limit and our guarantee is based on the quality of the business, its growth potential and we also consider if the business has the right skills to grow,” he said.
In addition, Bikop highlighted that they also monitor and evaluate the businesses that they sponsor to ensure that they do not fail.
AGF provides capacity development support to the partner financial institutions to improve their ability to properly assess SME risks and for the small businesses to build their capacity for easier access to finance.
AGF is funded 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), Nordic Development Fund (NDF) Investment Fund for developing countries (IFU) and KfW Development Bank.