African Guarantee Fund
African Guarantee Fund for Small and Medium-Sized Enterprises (AGF) is a pan-African non-bank financial institution whose aim is to promote economic development, increase employment and reduce poverty in Africa by assisting financial institutions to scale up their SME financing. African Business brings you the latest news and updates from AGF.
AGF’s Covid-19 response
AGF’s Covid-19 response is built on the imperative need for commercial solutions over and above the regulatory efforts already provided by the various central banks and governments in the continent.
AGF’s response sets the platform for economic stabilisation, followed by an economic revival through AGF’s newly developed Covid-19 Guarantee Facility that will, firstly, provide more comfort to financial institutions to restructure facilities that become non-performing because of COVID-19 and, secondly, provide commercial stimulus to the financial sector with the aim of mitigating the deterioration of SMEs’ perceived risk.
The facility, launched in May 2020, should enable banks to finance SMEs up to at least CFA1,449bn ($2.4bn). All Small and Medium Enterprises (SMEs) in Africa are eligible for the facility which will be available to banks for a period of two years.
AGF will also continue to use its technical assistance support to increase the capacity of financial institutions in their risk assessment of SMEs during the crisis period. This will allow analysing the impact of the pandemic on the financial institutions, so as to forge the best possible responses to adapt effectively.
For further information visit the African Guarantee Fund website.
A guarantee for African growth
AGF mitigates the inability of SMEs to provide acceptable collateral by sharing the risks anticipated by the financial sector through three types of guarantee products: Loan Guarantee, Bank Fund Raising Guarantee and Equity Guarantee.
AGF has led the guarantee market in Africa by unlocking financing of over $1.5bn across 40 African countries via more than 100 partner financial institutions. About 20,000 SMEs have been supported by AGF guarantees and in turn, these SMEs have been pivotal in the creation of more than 100,000 additional jobs.
AGF 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: Agence Française de Développement (AFD), Nordic Development Fund (NDF), Investment Fund for Developing Countries (IFU) and KfW Development Bank (KfW).
The Fund is rated AA- by Fitch Ratings.