IFU ISSUES USD 20 MILLION CAPITAL INCREASE TO AGF FOR GREEN SME FINANCING
African Guarantee Fund has today received a
capital increase of USD 20 million from the Danish Investment Fund for
Developing Countries (IFU) to facilitate green SME financing in Africa. The capital
increase is partially financed by the Danish Government, as part of the Danish
“COVID-19 Development Assistance” package. Including the additional USD 20
million, the total Danish investment in AGF amounts to USD 72 million.
The capital increment into the African
Guarantee Fund will increase the Fund’s capacity to unlock financing for Small
and Medium Enterprises (SMEs) in Africa. SMEs in the continent have experienced
a deterioration in their credit-worthiness as a result of the economic impact
of Covid-19. The United Nations Economic Commission for Africa 2020
survey reports business closure, lack of operational cashflow and a drop in
demand as the top challenges facing African SMEs as a result of the pandemic.
“The initial Danish capital
injection into the African Guarantee Fund not only generated economic and
social impact but also helped to attract more capital from other Development
Finance Institutions. AGF is currently supporting financial institutions and
SMEs to contain the impact of Covid-19 and to eventually recover in the
post-covid context. Our target is to keep SMEs afloat while maintaining their
workforce; and to ensure SMEs’ green transition. With this capital increment,
our capacity to offer more green guarantees to financial institutions is
enhanced and will facilitate sustainable financing for green transition in
Africa” said AGF’s CEO, Jules Ngankam.
“Private SMEs are vital for creating and safeguarding decent jobs in Africa, but they face huge challenges in the Covid-19 crisis. AGF is well placed to ease the negative consequences and help African SMEs to build back better and greener. IFU´s 20 million dollars investment provide funding of SMEs´ green transition, making more companies fit for a low carbon climate resilient future and create jobs. We are confident that our investment will attract other investors to exploit the proven potential of AGF filling the huge gap in SME financing in Africa,” said IFU’s CEO, Torben Huss.
AGF’s key objective is to reduce the SME financing gap currently estimated at more than USD 300 billion. With IFU’s capital increase, AGF will be able to achieve even more economic and social impact, given the investment will unlock more than USD 400 million of financing for SMEs.