The African Guarantee Fund (AGF) (https://AfricanGuaranteeFund.com), a leader in promoting financing of Small and Medium-sized Enterprises (SMEs) across Africa, and FSD Africa, a pioneering development agency committed to reshaping Africa’s long-term financial landscape, have today signed a strategic Cooperation Agreement aimed at propelling the growth of Green SMEs by providing critical financial support, technical assistance, and capacity building.
The Cooperation Agreement outlines a detailed framework of collaboration between the organizations in boosting sustainable development in Africa. The main aspects of this partnership involve assisting in the development of financial products for institutions, offering partial credit guarantees for bonds and funds raised on behalf of SMEs, and conducting capacity-building events.
Furthermore, by providing financial support and fostering business growth, Green SMEs are expected to play a pivotal role in reducing CO2 emissions. This active contribution aligns with the overarching goal of preserving the environment and facilitating access to finance for business growth and empowering SMEs to generate and sustain employment opportunities, especially for youth and women.
Speaking during the agreement signing, Mark Napier, Chief Executive Officer of FSD Africa said: “This partnership represents an important milestone in our efforts to foster sustainable economic development in Africa. By leveraging the strengths of FSD Africa and the African Guarantee Fund, we will actively create a robust ecosystem that empowers Green SMEs. This collaborative effort aims at facilitating access to affordable long-term funds, thereby accelerating the transition towards a greener and more resilient economy.”
Jules Ngankam, AGF Group Chief Executive Officer said: “Fostering a green economic transformation in Africa is one of our key priorities. Through this partnership, AGF will provide financial institutions with bank fundraising guarantees to enable them to access affordable funds aimed at facilitating loans to SMEs investing in low-carbon and climate-resilient businesses.
Additionally, AGF will extend partial credit guarantees to lenders in a bid to enhance credit accessibility for Green SMEs, empowering them to flourish and make meaningful contributions to environmental conservation.
The two organizations will also provide technical assistance on green financing initiatives, which is critical in building the capacity of key stakeholders such as Governments, Financial Institutions, and Green SMEs.
Distributed by APO Group on behalf of the African Guarantee Fund.
About FSD Africa:
FSD Africa (https://FSDAfrica.org) is a specialist development agency established in 2012 by the UK Government working to make finance work for Africa’s future. We work on the ground in over 30 African countries to mobilize “green plus” finance that will power economic and social development while delivering environmental gains and building Africa’s resilience. We work on policy and regulatory reform, capacity strengthening and improving financial infrastructure and addressing systemic challenges in Africa’s financial markets to spark large-scale and long-term change.
FSD Africa is part of a family of 10 financial sectors deepening, or FSD programs, operating across sub-Saharan Africa, known as the FSD Network. Together, the network provides over £50m a year in financial support to high-potential financial market development programs, and employs over 150 financial sector experts, based in local offices across Africa.
Our work has contributed to tackling financial exclusion challenges within Africa, supporting over 10.2 million people to access financial services. Such improved access has been particularly helpful during the Covid-19 crisis. For instance, between 2020 and 2021, we saw an 87% increase in the demand for and use of remittance services to cushion families from the adverse economic effects of COVID-19.
As of 2020, we supported approximately 35,700 Full-Time Equivalent (FTE) jobs, of which 20% were green jobs and 40% for women. About 42% of the jobs were created in Nigeria and the rest are spread across multiple countries. However, we are looking to intensify job creation in our priority countries.
Since 2017, we have helped mobilize more than £2 billion in long-term capital to underfinanced sectors, such as renewable energy and housing. This has resulted in a more efficient allocation of private and public capital to the productive sector, basic services, and climate finance.
In more recent years, our strategy has evolved to respond to Africa’s growing needs, with an increasing focus on finding innovative ways to mobilize capital for sustainable economic development. Following several successful initiatives, such as developing regulations and supporting green bond issuance programs in Kenya and Nigeria, we have doubled our investment into initiatives that support a just transition to a green future for Africa.
Since 2017 our green portfolio and pipeline have continued to grow, and we have invested close to £50 million into green investments. We continue to invest in programs that deliver environmental and social outcomes.
