African SMEs to benefit from $74m facility
The African Guarantee Fund (AGF) for Small and Medium-Sized Enterprises (SMEs), has entered into a re-guarantee transaction of up to $74million with GuarantCo, to increase its guarantee capacity for SME financing.
SME’s have a large and growing impact on GDP in emerging markets, and are a key source of job creation.With this increased capacity, AGF will be able to support larger local currency transactions for SMEs involved in infrastructure.
AGF affirmed that strengthening Africa’s infrastructure is critical for development, as it is through this that African countries become more competitive at a global level.
Over the past six years, AGF has led the guarantee market in Africa by issuing financial guarantees to a tune of $690million. This has enabled its partner financial institutions to issue loans estimated at $729 million to about 7600 African SMEs.
GuarantCo is part of the Private Infrastructure Development Group, (PIDG). It is a global guarantee fund that has issued over $900million of guarantees since inception in 2005, with a mandate to enable local currency finance for infrastructure.
While commenting on the GuarantCo AGF partnership, its Chief Executive Officer, Felix Bikpo, said: “AGF is glad to be joined by GuarantCo in bridging the infrastructure financing gap. This partnership aims to put in place an even stronger collaboration that will work on the entire value chain of infrastructure projects in Africa. We are looking forward to supporting other SMEs that work with key players in the infrastructure sector.”
GuarantCo’s Chief Executive Officer, Lasitha PERERA, said: “We are delighted to be able to partner with the African Guarantee Fund, and increase support to SMEs active in the infrastructure sector in Africa. This collaboration between two local currency focussed guarantors offers the potential for us to engage local financial institutions and investors in financing the entire value chain in an African infrastructure project.”
The transaction will enable AGF and GuarantCo to explore further partnership opportunities of working together in contributing towards economic growth in Africa.
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