French Development Agency supports African SMEs via a counter-guarantee of USD 30 million to the African Guarantee Fund
Mr. Rémy Rioux, Chief Executive
Officer of the French Development Agency (AFD), and Mr. Félix Bikpo, Group
Chief Executive Officer of the African Guarantee Fund for Small and
Medium-Sized Enterprises (AGF), signed a sub-participation agreement of USD 30
million, in Paris, on 28th November 2019. The agreement seeks to
improve access to credit to small and medium-sized enterprises (SMEs) throughout
the African continent.
The sub-participation agreement
signed between AFD and AGF broadens the existing cooperation between the two
entities, by providing AGF with a counter-guarantee of USD 30 million, using
the ARIZ risk-sharing mechanism: a support for the risk of financing private
investment. It consists in a final loss guarantee offered to financial
institutions by AFD to cover 50% to 75% of an individual loan or a loan
portfolio for SMEs and microfinance institutions (MFIs).
Through its leverage effect, this
counter-guarantee will enable AGF to extend guarantees of USD 60 million to
local financial institutions, thereby allowing the latter to lend a total of
USD 120 million to African SMEs. It is estimated that such an amount of loans
would benefit 1,800 SMEs and support 5,400 jobs.
After the signing ceremony, Mr.
Rioux and Mr. Bikpo discussed further areas of collaboration in the near
future. Special emphasis was placed on increasing African women’s access to
finance through the Affirmative Finance Action for Women in Africa (AFAWA)
initiative that will be implemented through AGF. AFAWA was officially launched
earlier this week at the Global Gender Summit having already received
commitment from the Government of France during the Biarritz Summit in August
2019. AFD and AGF are currently exploring different modalities of support for