African Guarantee Fund for Small and Medium-sized Enterprises (AGF) - African Development Bank

Donor: 
Any donor
International Finance Institutions
Geographical focus: 
Global
Africa
Thematic focus: 
Tourism in general
Employment, decent work and capacity building in Tourism
Trade, Investment and Competitiveness in Tourism
Social inclusion and Poverty reduction in Tourism
Intro text: 
On 1st June 2012,the AfDB’s President announced the official launch of the African Guarantee Fund (AGF), a market-friendly guarantee scheme aims at easing access to finance for African small SMEs. In order to make use of their potential, SMEs need increased access to bank credit. African SMEs historically lack access to finance, and this is likely to be exacerbated by the effects of the financial and economic crisis on the continent.

Official website

http://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/african-guarantee-fund-for-small-and-medium-sized-enterprises/

Geographic focus

Africa. AGF products will be rolled out in nine to fourteen countries in Africa within the first two years with the objective to cover the entire continent by year 2016.

Who can apply?

All African SMEs with a valid operating license regardless of sector, industry, location, and ownership.

Objectives and activities

Objective: AGF was established to address the mismatch in the supply and demand of SME financing. The AGF will be a permanent regional conduit for channeling guarantees and technical assistance to financial institutions in Africa with the objective of generating enhanced growth in the SME sector, thereby creating increased employment opportunities in the economy, particularly for the youth.

Activities: The Fund will provide financial guarantees to financial institutions to stimulate financing to SMEs and unlock their potential to deliver inclusive growth in the region. AGF’s products are expected to have a scalable positive impact in the following three ways:

  • Improve SME financial product offerings: by helping banks to better address working capital and long-term financing needs of SMEs.
  • Expand bankable SME segments: by changing Bank’s perception of bankable SMEs and permanently increasing their exposure to SMEs.
  • Increase Banks’ capacity to appraise SMEs: by providing technical assistance and strategies to further develop SME engagement.

Type and level of funding

The AGF provides:

  1.  Loan portfolio guarantees to Partner Lending Institutions (PLIs),
  2.  Financial guarantees to PLIs,
  3.  Capacity development support for PLIs, and
  4.  Capacity development support for SMEs.

2013-2017: the share capital of AGF is scheduled to increase to USD 500 million.