By Abdul Rahman Suagibu –
NEW AFRICA DAILY NEWS, Freetown, Sierra Leone- FRANCE, The French Development Agency (AFD) is bent on providing $30 Million via the African Guarantee Fund for Small and Medium Sized Enterprises (AGF), in order to accelerate access credit to small and medium sized enterprises (SMEs) throughout Africa.
AFD Chief Executive Officer – Mr. Rémy Rioux and AGF Group Chief Executive Officer – Mr. Félix Bikpo, validated a sub participation agreement of $30 million in Paris on 28th November, 2019. The sub participation agreement confirmed between duo, will help to widen the mutual unobstructed action between the two parties, by extension offering AGF with a counter guarantee of $30 million, by making proper utilization of the ARIZ risk-sharing mechanism: a support for the risk of financing private investment.
Details of document expounded that, the risk-sharing mechanism comprised in a final loss guarantee offered to financial institutions by AFD to cover 50% to 75% of an individual loan or a loan portfolio for SMEs and microfinance institutions (MFIs).
It sufficiently detailed that, through its high ability to earn high returns; this counter-guarantee would improve AGF to extend guarantees of $60 million to local financial institutions, by way of allowing the latter to lend a total of $120 million to African SMEs. It is calculated roughly that such an amount of loans would benefit 1,800 SMEs and support 5,400 jobs.
Shortly after the validation of the ceremony, Mr. Rioux and Mr. Bikpo discussed further areas of collaboration in the near future. Emphasizes were prioritized 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 was officially launched at the Global Gender Summit having already received commitment from the Government of France during the Biarritz Summit in August 2019. AFD and AGF are currently exploring different modalities of support for this initiative.
AGF is a non-bank financial institution, objectively to lift up economic development, increase employment and reduce poverty in Africa by providing financial institutions with guarantee products and capacity development assistance specifically meant 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.
For New Africa Daily News Abdul Rahman Suagibu Reports, Africa Correspondent