AGF and Zenith Bank Ghana partner to Empower Ghanaian SMEs

African Guarantee Fund and Zenith Bank (Ghana) Limited, a leading holistic financial services provider announced a strategic risk-sharing partnership to provide increased access to funding for Micro, Small and Medium Enterprises (MSMEs) in Ghana, with a particular focus on green business and women-owned/led businesses.

Recognizing that most MSMEs struggle to secure loans due to insufficient collateral or lack of credit history despite their invaluable contribution to the economy, this collaboration unlocks a suite of financial products and services specifically designed to address the unique needs of these businesses, fostering their growth and success.

AGF will provide partial guarantees on loans issued by Zenith Bank Ghana, thus reducing the Bank’s risk and making it easier for MSMEs to qualify for funding, opening doors they might have found previously closed.

African Guarantee Fund, in its first agreement with Zenith Bank Ghana, is pioneering a landmark partnership aimed at bolstering SME lending activities in the country. This collaboration marks a significant stride in fostering economic growth and empowerment within Ghana’s vibrant SME landscape. Mr. Bendjin Kpeglo, AGF West Africa Managing Director said, “This partnership is a significant stride in our mission to drive sustainable economic development through our guarantee facilities to increase Zenith Bank Ghana’s financing of MSMEs in Ghana.”

“AGF will not only provide credit guarantees, but will also equip Zenith Bank with the necessary tools and knowledge to effectively navigate and thrive in the SME lending landscape, through our capacity development program” added Mr. Kpeglo

Managing Director and Chief Executive Officer of Zenith Bank Ghana, Henry Onwuzurigbo, speaking at the signing ceremony which came off at the Zenith Bank Ghana Head Office in Accra, said the Bank was acutely aware of the importance of small and medium size businesses as well as the challenges they face in accessing finance.

He added that the partnership was consistent with the Bank’s belief that banking is exhibited in its purest form when it has a direct impact on businesses and consequently, the real economy.

“MSMEs are the lifeblood of the Ghanaian economy, and we are committed to providing them with the financial support they need to thrive,” Mr. Onwuzurigbo stated. “This partnership with AGF will enable us to reach more businesses, particularly those owned by women and those committed to sustainability, and help them achieve their full potential.”

Despite the progress made in recent years in promoting financial inclusion for women, the gender financial gap in Ghana is estimated at $242 million[1]. Women entrepreneurs face financial exclusion, often the biggest challenge in running and growing their businesses. These exclusionary barriers include a lack of collateral, lack of understanding of financing or lack of inexperience in business management, as well as social and cultural constraints like the inability to inherit land.

The partnership leverages African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA)’s Guarantee for Growth program, which aims to unlock up to $3 billion in financing for women-led small and medium enterprises in Africa through financial institutions. A substantial portion of the risk-sharing mechanism will offer women-owned and women-led businesses discounted loan pricing and increased guarantee cover along with technical assistance support to help reduce the gender finance gap in Ghana. This aligns with Zenith Bank Ghana’s commitment to financial inclusion and gender equality.

“This new signature agreement illustrates the African Development Bank’s commitment, through the AFAWA initiative, to promote women’s economic empowerment and financial inclusion while addressing the gender financial gap in Ghana,” said Eyerusalem Fasika, Country Manager of the African Development Bank’s Ghana Office, after the ceremony.

“The AFAWA component within this transaction will support Zenith Bank Ghana in de-risking women-led businesses within its portfolio. We’re thrilled to see AFAWA and its implementing partner, the African Guarantee Fund, grow more support from financial institutions to boost women entrepreneurs’ access to finance in Ghana,” Fasika added.

The partnership also recognizes the growing importance of sustainability. Businesses operating in green sectors such as renewable energy, eco-tourism, and sustainable agriculture will benefit from increased financing backed by AGF’s Green Guarantee Facility, demonstrating both institution’s commitment to environmental sustainability.

Beyond financial support, Zenith Bank Ghana and AGF are committed to empowering MSMEs with the knowledge and skills they need to develop capacity to expand their business. They will collaborate to offer training workshops on financial literacy, business management, and sustainable practices. These workshops will equip MSMEs with the tools needed to navigate the market effectively, make informed decisions, and operate their businesses efficiently.

Longstanding tradition

This partnership builds upon Zenith Bank Ghana’s longstanding dedication to supporting MSMEs in Ghana. In October 2022, the Bank introduced dedicated MSME accounts and partnered with organisations like Development Bank of Ghana (DBG) and World Trade Center Accra in collaboration with Alibaba to expand market access.

Furthermore, the Bank has collaborated with the German Sparkassenstiftung for International Cooperation (GIZ) to provide access to finance training and partnered with VISA to roll out the Zenith SME Business card to serve the business needs of SMEs and improve their business efficiency and productivity.

These initiatives demonstrate Zenith Bank Ghana’s unwavering commitment to fostering an environment where MSMEs can flourish and contribute meaningfully to the Ghanaian economy.

By combining their expertise and resources, Zenith Bank Ghana and AGF are creating a powerful ecosystem that empowers MSMEs in Ghana to overcome challenges, unlock their full potential, and become the driving force of economic growth and prosperity.

[1] MSME Finance Gap | SME Finance Forum