African Guarantee Fund for Small and Medium-sized Enterprises (AGF) has signed a new agreement with Oikocredit for a US$ 25 million enhancement of its past loan guarantees to the development cooperative, bringing its total 10-year loan guarantee to US$ 43 million.

Oikocredit will use the additional guarantee to increase lending to partners across Africa with higher risks, such as small and medium size enterprises (SMEs) and microfinance institutions (MFIs). The guarantee will also support lending to agricultural and renewable energy businesses and cooperatives, including businesses affiliated to women.

Besides the guarantee, AGF will contribute close to US$ 400,000 as a grant to The Stichting Oikocredit International Support Foundation. The grant will be used to strengthen Oikocredit’s capacity to enable SME lending through training for investment officers and analysts, development and deployment of risk assessment tools, market studies and product development.

Jules Ngankam, AGF’s Chief Executive Officer, said: “Since 2013, AGF has supported Oikocredit with loan guarantees that have resulted in increased lending to Microfinance Institutions and to small and medium-sized enterprises in the agricultural and renewable energy sectors. With the current guarantee enhancement, Oikocredit can now further extend its intervention towards facilitating financing of women-led and women-owned businesses. This will be achieved through the AFAWA Guarantee for Growth program, which is implemented by AGF.”

Hans Perk, Oikocredit’s Regional Director Africa, said: “Working with AGF, Oikocredit wants to double its portfolio in Africa in the coming years, with a specific focus on agriculture, women-led SMEs and renewable energy. We especially welcome AGF’s technical assistance funding to enhance our own and our partners’ capacity. At a time when the pace of economic recovery in Africa remains uncertain, AGF’s loan guarantee provides us with additional confidence to continue to support our work and achieve higher social impact in communities we serve in Africa.”