Proparco’s investment of $10 million in the African Guarantee Fund will contribute to AGF’s growth and support the AFAWA initiative launched to increase access to financing for women entrepreneurs.
The Affirmative Finance Action for Women in Africa (AFAWA) is a joint initiative of the African Development Bank and the African Guarantee Fund (AGF), launched in 2016 and supported by France and the G7 member states. It aims to bridge the financing gap that affects women in Africa by increasing the volume of loans granted to them (financing component), building the capacity of women entrepreneurs while providing advisory services to financial institutions that serve them (technical assistance component) and dialogue with stakeholders to eliminate obstacles to their success (business environment component).
The financing component is notably implemented by the AGF, which offers financial institutions risk-sharing mechanisms enabling them to better serve SMEs. The $10 million equity investment in AGF, via the AFD Group’s FISEA+ facility, will specifically strengthen AGF’s ability to meet the objectives of the AFAWA initiative.
As part of this AFAWA initiative targeting women entrepreneurs, AGF is committed to following the criteria of the 2X Challenge initiative, which aims to increase the economic participation of women in emerging and developing countries. Launched in 2018 by the G7 Development Finance Institutions (DFIs), this initiative, in which more than fifteen DFIs now participate, has set itself a new objective in 2021 of mobilizing 15 billion dollars by the end of 2022.
More than 14,000 VSEs/SMEs should benefit from this investment, thus supporting more than 120,000 direct and indirect jobs. The priority given by AFD Group to supporting VSEs/SMEs, in particular those headed by women.
The launch of the French Choose Africa initiative has enabled the AFD Group to step up its support for the growth of African start-ups, VSEs and SMEs. Thus, since 2018, more than 3 billion euros have been committed for the benefit of more than 26,000 VSEs/SMEs in Africa. Building on this success, AFD Group will pursue its efforts over the next few years by continuing to adapt its tools to the needs of entrepreneurs. The FISEA+ facility launched in 2021 is part of this perspective, specifically targeting fragile countries, social and solidarity enterprises and SMEs that provide essential goods and services through digital innovation.
With the Choose Africa initiative, France is catalysing European commitment to African entrepreneurship. This commitment materialized in particular in 2020 through an increased mobilization of European DFIs to support VSEs/SMEs affected by the crisis. Supporting African entrepreneurship is now one of the priorities of the partnership between Europe and Africa.
“Risk-sharing mechanisms are among the most effective tools to meet the challenge of financing small and medium-sized enterprises. Proparco is proud to commit to strengthening them as part of the AFAWA initiative, whose ambition in favor of female entrepreneurship is commensurate with the challenge it represents for the development of the African continent.” said Grégory Clemente, Chief Executive Officer of Proparco.
“SMEs in Africa face a set of challenges that impede their growth, the main one being access to finance. This funding challenge is heightened when it comes to women-led SMEs, as these SMEs are perceived to be riskier, and therefore face prohibitive interest rates. In addition, because of certain legal frameworks still in force, women sometimes have difficulty accessing assets that can serve as collateral. Thanks to this capital increase, AGF will further support women’s entrepreneurship by improving the conditions of access to financing and strengthening the capacities of women entrepreneurs.” said Jules Ngankam, Group Chief Executive Officer of AGF.