This archive report was first published on 29 November 2019.
On November 29, 2019, the French Development Agency (AFD) and the African Guarantee Fund (AGF) signed a sub-participation agreement worth over Sh3 billion to enhance access to credit for small and medium-sized enterprises (SMEs) in Africa.
The agreement, which is a significant boost to the SME sector, will provide AGF with a counter-guarantee of over Sh3 billion using the ARIZ risk-sharing mechanism. This mechanism offers a final loss guarantee to financial institutions to cover 50-75% of individual loans or loan portfolios for SMEs and microfinance institutions.
Through this leverage effect, AGF will be able to extend guarantees of USD 60 million to local financial institutions, enabling them to lend a total of USD 120 million to African SMEs. It is estimated that this amount of loans will benefit 1,800 SMEs and support 5,400 jobs.
After the signing ceremony, Mr. Rémy Rioux, CEO of AFD, and Mr. Félix Bikpo, Group CEO of AGF, discussed further areas of collaboration, including increasing African women's access to finance through the Affirmative Finance Action for Women in Africa (AFAWA) initiative.
AFAWA was launched earlier in November 2019 at the Global Gender Summit, with the Government of France committing to support the initiative during the Biarritz Summit in August 2019.
