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African Guarantee Fund and Centenary Bank Reinforce Commitment to SME Growth with Renewed USD 25 Million Guarantee Facility

In a significant boost to Uganda’s trade and construction sectors, African Guarantee Fund has renewed its Portfolio Guarantee Limit of USD 25 million to Centenary Bank, the largest microfinance bank in Uganda. This renewal underscores AGF’s continued commitment to supporting Small and Medium Enterprises (SMEs) in Uganda, enhancing their access to much-needed financing.

An official signing ceremony was held to highlight the partnership between the African Guarantee Fund and Centenary Bank. This partnership has already demonstrated substantial benefits, particularly for the trade and construction sectors, which are crucial drivers of Uganda’s economy.

Over the past years, AGF’s guarantees have enabled Centenary Bank to extend financing to a significant number of SMEs. With the renewed guarantee, it is projected that close to USD 200 million in financing will be unlocked, with more than 700 SMEs benefitting from the financial support needed to grow and expand their operations.

Speaking at the ceremony, AGF Group CEO, Jules Ngankam acknowledged that this renewed collaboration enhances the existing agreement aimed at bolstering the financing capabilities for Ugandan SMEs, including women-led and green businesses.

“Our partnership with Centenary Bank represents a significant step in our mission to support SMEs, who account for approximately 90% of private sector businesses in Uganda. By enhancing access to finance for SMEs, particularly those led by women and involved in green initiatives, we are not only fostering entrepreneurship but also contributing to sustainable economic development in Uganda,” Jules said.

In addition to the extension of the credit guarantee facility, the African Guarantee Fund will provide a Capacity Development grant to Centenary through that will be utilized in automation of credit processes, to enhance efficiency and proper credit analysis of their loans. Diagnostic assessment to enable the bank embark on green financing and women financing more effectively.

According to Fabian Kasi the Managing Director, Centenary Bank, the renewed guarantee limit will primarily benefit the trade and construction sectors. These sectors have been identified as critical for economic development and job creation in Uganda.

“Through the African Guarantee Fund, we have been able to support over 1,600 SMEs in the trade and construction sectors. These businesses have not only thrived but have also created thousands of jobs, contributing significantly to the socio-economic fabric of our nation while contributing to our environmental and social governance agenda. The direct and indirect benefits of this support extend far beyond the individual businesses, influencing the broader economy and touching countless lives sustainably,” Fabian said.

This partnership is also backed by the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) initiative, which aims to bridge the USD 49 billion financing gap facing women entrepreneurs in Africa by providing more concessional loans and better collateral terms.

Centenary Bank was recently honored with the AFAWA Bank of the Year Award at the 2024 African Banker Awards. This prestigious award recognized the financial institutions for its significant strides in supporting women SMEs. The ceremony, held in Nairobi, Kenya highlighted Centenary Bank’s commitment to financial inclusion through initiatives like the Cente SupaWoman program, which offers financial education and business skills training to women entrepreneurs

The infusion of capital into SMEs is expected to have a multiplier effect on the economy. By improving access to finance, SMEs can increase their production capacities, create more jobs, and contribute to higher tax revenues. This, in turn, will lead to a stronger GDP growth trajectory for Uganda, enhancing overall economic stability and prosperity. Business owners are encouraged to embrace the availed credit facilities through such funds intentional about fostering business growth.