African Guarantee Fund receives €25 million to support small businesses
The African Guarantee Fund for Small and Medium-Sized Enterprises (AGF) has received a capital increase amounting to EUR 25 million from the KfW Development Bank, a German government-owned development bank, based in Frankfurt.
It provides financing to governments, public enterprises and commercial banks engaged in microfinance and SME promotion in developing countries.
Commenting during the onboarding of the new shareholders, AGF Chief Executive Officer, Felix BIKPO stated, “Through the increased capital, AGF has acquired more capacity to address the financing barrier which remains a key challenge for African SMEs. AGF will now be able to channel more guarantees and technical assistance to financial institutions thereby generating enhanced growth in the African SME sector.”
KfW’s Director for Regional Funds, Thomas Duve, stated, “AGF is a good example for an ‘African solution for an African problem’. The institutional and economic strength of AGF, mirrored in its AA- credit rating, make AGF a perfect partner for commercial African banks who are willing to finances SMEs. Our investment into AGF forms part of KfW’s strategy to promote private investment and financial markets in Africa.”
African Guarantee Fund is the first African institution wholly dedicated to mobilizing private resources for SME development on the African continent.
It has over the past 6 years, led the guarantee market in Africa by issuing guarantee products to more than 100 financial institutions, that have in turn made available USD 1.6 billion of financing for SMEs across the 39 countries in Africa.
With KfW’s capital injection, AGF has now successfully concluded USD 90 million first closing of its fundraising campaign. AGF’s key objective is to reduce the SME financing gap currently estimated at more than USD 155 billion. This is to be achieved by raising $320 million additional capital over the next 4 years.
