Ecobank, the leading pan-African banking group, and the African Guarantee Fund (AGF) have inked a groundbreaking $200 million risk-sharing agreement aiming to stimulate economic growth and bolster entrepreneurship on the continent, particularly supporting women-owned SMEs. The agreement, signed at the Africa Financial Industry Summit in Lomé, Togo, signifies a pivotal moment for both entities in advancing economic development in Africa.
This third renewal of the partnership between Ecobank and AGF commenced in 2013, initially covering seven countries and providing a $50 million guarantee. Subsequently expanded to 14 countries in 2018, the collaboration has cumulatively disbursed $230 million to fuel SME growth in these markets. This renewed agreement extends to 27 countries within Ecobank’s network, providing 50% risk coverage for eligible SMEs, marking it as the largest collaboration between the two organizations.
The partnership targets the challenges faced by SMEs in accessing affordable financing. Key benefits include:
Benefits for SMEs:
Enhanced Guarantee Cover: The partnership offers a 75% guarantee cover for gender financing and green transactions, accompanied by reduced pricing to incentivize these transactions.
Increased Lending Capacity: With the $200 million facility, Ecobank significantly elevates its lending capacity to SMEs, facilitating more businesses’ access to capital.
Risk Mitigation: AGF’s risk mitigation expertise reduces the lending risks associated with SMEs, fostering a conducive environment for financial institutions to support these businesses without compromising their risk profiles.
Financial Inclusion: Expanding financial inclusion across Africa, providing more individuals access to the banking system, and enabling participation in the formal economy.
Economic Impact: The amplified lending capacity is anticipated to stimulate economic activity and job creation across various sectors in sub-Saharan Africa.
Jeremy Awori, Ecobank’s Group CEO, expressed enthusiasm about the partnership’s potential to uplift SMEs and the overall economic landscape. He emphasized the initiative’s focus on green and gender-focused financing to address barriers faced by women-owned businesses in accessing credit.
Jules Ngankam, AGF’s Group CEO, highlighted the transformative impact of the partnership on SMEs and acknowledged its extension to 27 countries, emphasizing the importance of risk-sharing mechanisms in expanding banks’ SME portfolios.
The $200 million risk-sharing agreement is poised to significantly influence Sub-Saharan Africa’s financial landscape, showcasing the collaborative strength in driving economic growth and supporting entrepreneurship.
The agreement spans 27 countries including Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Congo, Côte d’Ivoire, Democratic Republic of Congo, Equatorial Guinea, Gabon, Ghana, Guinea Bissau, Guinea Conakry, Kenya, Mozambique, Nigeria, Rwanda, Senegal, Sierra Leone, South Sudan, Tanzania, Togo, Uganda, Zambia, and Zimbabwe.