In a move that will catapult efforts to enable African Small Medium Enterprises (SMEs) continue to play a critical role in driving Africa’s economy, the African Guarantee Fund (AGF) has received an additional capital of $33million financing from German lender KfW Development Bank.
With this development, not less than 10,000 African SMEs would be financed annually by the African Guarantee Fund, stating that it would enable it to focus more on its goal to provide financially guarantees for African small businesses through partner financial institutions.
According to the Guarantee Institution, this new financing comes at a time when the continent’s SME sector has been singled out as a key driver of growth.
AGF in a statement over the weekend noted that providing financial guarantees for over 10,000 SMEs annually would have a trickledown effect by creating 30,000 jobs per year.
“We are excited about the confidence our shareholders and partners have in what we are doing in Africa. This capital injection will go a long way in ensuring that we continue to make a positive impact on the continent. So far, we have cumulatively issued more than USD 1 B worth of guarantees making available about USD 1.7 billion for SME financing through our Partner Financial Institutions. This has led to the creation of more than 100,000 additional jobs,” says Felix Bikpo, Group CEO of African Guarantee Fund.
Out of the 20,000 African SMEs from various economic sectors that have so far benefited from AGF guarantees, the institution is very proud that 60 per cent of these SMEs are owned by the youth who are the majority in Africa today, and 30 per cent owned by women, both being demographics that heavily impact Africa’s economy.
Bikpo added, “Our experience traversing Africa has shown us that Women in Africa are tenacious entrepreneurs, even though they face a gender financing gap of USD 42 billion. The capital increase from KfW will largely be used to increase financing of women-owned or led businesses. This is in addition to our partnership with the African Development Bank through the recently launched Affirmative Finance Action for Women in Africa (AFAWA) which currently has a USD 251 million commitment from G7 countries.”