African Guarantee Fund has signed a three million USD guarantee agreement with FDH Bank Malawi. The partnership will unlock financing and facilitate promotion, growth and development of Small and Medium-sized Enterprises (SMEs) in Malawi.  

This comes against a background of SMEs facing serious challenges to access financing in order to expand and grow their businesses. Recent studies have shown that SMEs employ as much as 1 million people in Malawi, while at the same time their economic activities are the main source of livelihood for 70% of the country’s population. However up to 75% of all SMEs do not have access to formal financing and 59% are entirely excluded from the formal finance sector.

The partnership between AGF and FDH Bank is therefore a strategic move to position the bank towards increasing its SME financing thus escalating SME growth.

AGF Chief Executive Officer, Felix Bikpo hailed FDH Bank for being the first financial institution in Malawi to have partnered with AGF. He said, “We are certain that this partnership will empower SME growth and increase job creation in the country. AGF is also very keen on the agricultural sector. Through FDH Bank, we will increase financing of SMEs in agribusiness which will greatly increase Malawi’s economic growth.” 

The Managing Director of FDH Bank, Eric Ouattara said “FDH Bank has a solid track record of promoting SMEs in Malawi and with this partnership we are going to increase the number of SMEs we finance and also pay special focus to the women entrepreneurs, agri-businesses and the youth, among others to facilitate their growth and in turn the growth of our economy.”

On his part, Minister of Finance, Economic Planning and Development, Goodall Gondwe acknowledged the SME sector as one of the key areas in growing the economy, but noted that the environment is not conducive due to high interest rates.

He said, “As a government we will do everything we can to join hands with the banks and partners to make sure we succeed. We will take up on the goodwill AGF has shown and make good use of it.”