African Development Bank’s AFAWA and AGF partner to unlock loans to women entrepreneurs

The partnership will unlock $1.3-2bn in loans to women-owned SMEs in Africa and signals the launch of AFAWA's Guarantee for Growth programme.


Image : AGF

This article is sponsored by African Guarantee Fund

The African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) programme has agreed a partnership with the African Guarantee Fund (AGF) to unlock $1.3-2bn in loans to women-owned Small and Medium Sized Enterprises (SMEs) in Africa, by working with financial institutions to enhance their ability to lend to women.

The move signals the launch of AFAWA’s Guarantee for Growth (G4G) programme, which aims to make available up to $3bn in financing for women entrepreneurs through de-risking and technical assistance measures. Already, financial institutions in Cameroon, Democratic Republic of Congo, Kenya, Rwanda, Tanzania and Uganda are signing on to the programme.

“As the implementing partner of AFAWA’s Guarantee for Growth programme, we are already observing an increased appetite from banks for this innovative product that seeks to support women entrepreneurs. We have recently signed agreements with leading banks on the continent who are keen to increase their women SMEs portfolio,” said Jules Ngankam, African Guarantee Fund’s Group CEO.

“AGF has always been cognisant of the importance of supporting women SMEs to enable them fully play their role as drivers of economic growth. We are glad the momentum is increasing and that banks are now willing to take on this particular business segment,” Ngankam added.

Guarantee for Growth, which receives support from the Group of Seven (G7) countries as well as the Netherlands and Sweden, has three pillars: boosting access to finance, providing technical assistance to financial institutions and women business owners; and improving the enabling environment for women’s SMEs.

“The signing of the AFAWA Guarantee for Growth programme with the African Guarantee Fund is a critical milestone for the Bank to successfully deploy on-the-ground financing instruments better suited to addressing the financing and training needs of women-owned small and medium enterprises in Africa for the growth of their businesses,” said Stefan Nalletamby, the Bank’s Director of Financial Sector Development.

“There is an urgent need to improve the enabling environment with the right regulations in place, to sustainably de-risk the segment,” said Esther Dassanou, AFAWA’s Coordinator. “The Bank will work with regulators to reform the legal and regulatory frameworks affecting women businesses’ access to finance,” she added.

The Guarantee for Growth is also expected to reach an average of 18,000 women small and medium enterprises and create 80,000 direct jobs, Dassanou said.

African women face a $42bn financing gap, which AFAWA aims to bridge. This is tied to a lack of access to collateral in the form of land and property as well as to knowledge, mentorship, and networks to grow their businesses, which are typically in the informal sector.

“Donor and private sector-support for the overall AFAWA initiative is helping the Bank set ambitious targets for AFAWA Guarantee for Growth programme,” said Vanessa Moungar, the Bank’s Director for Gender, Women and Civil Society. “The entire Bank ecosystem will be at play – inviting more financial institutions to sign into the programme – ensuring engagement, implementation, and ownership at the market and policy levels,” she added.

About African Guarantee Fund

African Guarantee Fund is a non-bank financial institution whose objective is to promote economic development, increase employment and reduce poverty in Africa by providing financial institutions with guarantee products and capacity development assistance specifically intended to support SMEs in Africa.

African Guarantee Fund was founded by the government of Denmark through the Danish International Development Agency (DANIDA), the government of Spain through the Spanish Agency for International Cooperation and Development (AECID) and the African Development Bank (AfDB). Other shareholders include: French Development Agency (AFD), Nordic Development Fund (NDF), Investment Fund for Developing Countries (IFU) and KfW Development Bank (KfW).

AGF has a rating of AA- by Fitch Ratings Agency.  

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