French Development Agency invests US$30m in the African Guarantee Fund

AFRICA – The African Guarantee Fund (AGF) has received US$30 million from the French Development Agency (AFD) to support small and medium sized enterprises (SMEs) in Africa.

The fund seeks to improve access to credit by SMEs throughout Africa besides supporting the risk of financing private investments.

The agreement by the two institutions was signed by AFD Chief Executive Officer Rémy Rioux and AGF Group Chief Executive Officer Félix Bikpo in Paris.

The sub-participation agreement signed between AFD and AGF broadens the existing cooperation between the two entities, by providing AGF with a counter-guarantee of US$30 million, using the ARIZ risk-sharing mechanism: a support for the risk of financing private investment.

“Through its leverage effect, this counter-guarantee will enable AGF to extend guarantees of US$60 million to local financial institutions, thereby allowing the latter to lend a total of US$120 million to African SMEs

“It is estimated that such an amount of loans will benefit 1,800 SMEs and support 5,400 jobs,” Mr Bikpo said.

After the signing ceremony, Mr Rioux and Mr Bikpo discussed further areas of collaboration in the near future, putting special emphasis on increasing African women’s access to finance through the Affirmative Finance Action for Women in Africa (AFAWA) initiative that will be implemented through AGF.

AFAWA has already received a commitment from the government of France during the Biarritz Summit in August 2019 but AGF and AFD are exploring different modalities of support for the initiative. AFAWA was officially launched at the Global Gender Summit 

AGF 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.

It 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).

AFD Group funds, supports and accelerates the transition to a fairer and more sustainable world focusing on climate, biodiversity, peace, education, urban development, health and governance.

It carries out more than 4,000 projects in France’s overseas departments and territories and another 115 countries.

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