FAGACE: A force for solutions in the African financial ecosystem

The African Guarantee and Economic Cooperation Fund (FAGACE) is strengthening its central role in supporting member states such as Senegal as they face major financing challenges. Ngueto Yambaye, its director general since July 2020, fills us in on its reforms and their success.

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This article is sponsored by FAGACE

Could you give us an overview of the Fund and its activities?

FAGACE, a pioneer in the field of bank guarantees in Africa, is an international financial institution that specialises in the promotion of public and private investments. For more than 45 years, it has been working for the economic and social development of its 14 member states facilitating access and financing small and medium enterprises (SMEs). 

To date, thanks to the guarantee of bank loans, its interventions have made it possible to mobilise more than CFA3,000bn ($4.9bn) for the benefit of the economies of its member states.

Senegal in particular has benefited from sponsorship of around CFA310bn ($503m) in support of 68 projects in strategic sectors of the economy such as industry, agro-industry, energy, infrastructure, telecommunications, transport, mining, insurance, etc.

What are the new ambitions and main strategic orientations of FAGACE, 45 years after its launch?

Today, FAGACE is embarking on a new era of transformation in order to be more in line with developments in the financial market and fulfil the expectations of member states’ economies. 

From the moment I was appointed as managing director, my priority was to set up a new Strategic Plan for 2021-25 in order to bring in structural changes and to increase the Fund’s performance and outreach.

The objectives of the Strategic Plan are:

  • to modernise the Fund;
  • to strengthen the effectiveness of its governance;
  • to increase its interventions;
  • to mobilise resources;
  • to intensify cooperation with partner banks and institutions to facilitate access to investments and to increase credits as much as possible.

To this end, we have developed a close partnership with the governments and institutions of the member states according to our vision and to support investment and financing. One of our goals is to achieve sustainable growth and employment by supporting both public and private sector projects. 

In addition, to make its new offer clearer, the Fund has refocused on guaranteeing structural projects in its member states with distribution of products mainly through banks’ management and intermediary companies. 

Another important innovation has been the creation of the FAGACE Institute. Aware of its role as a catalyst for the financial integration of the economies of its member states, the Fund intends to provide its members states, project holders, banks and institutions with its recognised expertise in assistance and setting up projects, business plans and negotiating with financial partners, as well as in technical support for arranging and closing financing. 

The FAGACE Institute will provide a forum for reflection on major economic monetary, financial and social issues, as well as on the main challenges facing companies and how those challenges must be overtaken. 

This think-tank draws on the experience and expertise of FAGACE specialists along with experts and consultants from the world of international finance and has a goal of being a support and an added value to its various partners.

What is the impact of the Strategic Plan?

These new measures have resulted in:

  • an “AA-” financial rating for FAGACE by GCR Ratings, a subsidiary of Moody’s, for the year 2022;
  • an “A+” rating from the Association of African Development Finance Institutions (AADFI) for the year 2022; 
  • the creation of an independent Assessment Board composed of the central banks of the four currency areas to which member states belong;
  • the strengthening of governance, with three independent directors on the Board of Directors;
  • operational excellence in compliance with the most demanding prudential standards;
  • strong and controlled growth;
  • profitable results for more than five years and financial statements that comply with IFRS accounting standards;
  • increased intervention;
  • more states close to joining;
  • reforms in line with similar international organisations.

How does FAGACE position itself as a development institution in Africa?

As a guarantor, the Fund acts as an accelerator of business development and a tool for financing African economies. Emphasis is also placed on guaranteeing specific financing lines adapted to each sector to facilitate the mobilisation of adequate resources to finance economies.

FAGACE member countries face a number of obstacles, of which access to finance is the most important. The costs associated with financing are very high and are compounded by the need for significant collateral. 

In this respect, the Fund has developed a specific approach that has significant socio-economic benefits, broken down into four main points:

  • support for national development programmes through the accompaniment of structuring projects;
  • the development and improvement of access to credit for businesses, which has enabled the promotion of entrepreneurship and the financing of numerous projects guaranteed by the Fund;
  • mentoring and strengthening of human skills by the FAGACE Institute;
  • the mobilisation of private capital to finance the economy.

What would you say in conclusion?

To conclude, I would like to reaffirm, in view of the positive transformations recorded in recent years, that FAGACE continues to strengthen its leading role in supporting member states such as Senegal, which are facing major financing challenges to the modernising of their economies. 

In this context, FAGACE is the right institution to support countries in the realisation of development strategies, for both structural projects and SMEs. There are five reasons for this:

FAGACE has a significant guarantee capacity capable of supporting ambitious development strategies requiring substantial financial resources and long-term financing.

The Fund has a solid track record and business expertise with a strong network of financial and technical partners extending beyond national borders, developed over 45 years of activity.

The Fund enjoys total independence and is anchored at the highest level of the member states, enabling it to support the development programmes of the member countries.

FAGACE’s ambitions, its key role and the transformations it has undertaken confirm its place as a force for solutions in the African financial ecosystem.

Finally, in line with its international vocation, FAGACE is continuing to expand. It is strengthening financial structure with a capital of CFA500bn ($817m) and opening the door to the entry of new African countries and multilateral institutions.