Ecobank and AGF Sign $200m Risk Sharing Agreement with focus on women-owned SMEs

Ecobank, the leading pan-African banking group, and the African Guarantee Fund (AGF), a specialized pan-African guarantee provider, have come together in a groundbreaking agreement worth USD200 million. This partnership aims to stimulate economic growth and support entrepreneurial ventures, with a particular focus on women-owned SMEs across the continent.

The agreement, which was signed during the Africa Financial Industry Summit in Lomé, Togo, marks the third renewal of Ecobank’s partnership with AGF. Initially, the guarantee covered only seven countries with a total portfolio of USD50 million in 2013. However, it has since expanded to include 14 countries, resulting in a cumulative disbursement of USD230 million. Now, the partnership extends to 27 countries within Ecobank’s African network, offering 50% coverage for qualifying SMEs in all target markets.

By combining Ecobank’s extensive network and financial expertise with AGF’s proven track record in risk mitigation, this collaboration aims to address the challenges faced by SMEs in accessing affordable financing.

Some key highlights of this partnership include enhanced guarantee cover of 75% for Gender Financing and Green Transactions. This means that more women-led and environmentally friendly transactions will be fast-tracked, with reduced pricing to encourage their growth.

Furthermore, the USD200 million facility allows Ecobank to significantly increase its lending capacity, providing even more support to SMEs across the continent.

Overall, this partnership between Ecobank and AGF represents a major step forward in promoting economic development and empowering entrepreneurs in sub-Saharan Africa.

Here are the key highlights of the partnership:

1. Improved Guarantee Cover: The partnership ensures that more women-led and green transactions are given priority by offering a 75% guarantee cover. This comes with favorable terms and reduced pricing to support these initiatives.
2. Increased Lending Capacity: Ecobank can now boost its lending capacity to SMEs with the USD 200 million facility. This means that more credit facilities can be extended to SMEs looking to expand, innovate, and create jobs.
3. Risk Mitigation: The African Guarantee Fund (AGF) plays a crucial role in mitigating credit risks associated with lending to SMEs. This creates a more favorable environment for financial institutions to support these businesses without compromising their risk profiles.
4. Financial Inclusion: By directing funds towards SMEs, this partnership aligns with broader financial inclusion goals. It ensures that a diverse range of businesses, including those in underserved and remote areas, can access the financial resources they need for growth.
5. Economic Impact: The USD 200 million risk-sharing agreement is expected to have a positive ripple effect across various sectors. It will contribute to increased economic activity, job creation, and sustainable development throughout sub-Saharan Africa.

Ecobank Group CEO, Jeremy Awori, expressed his excitement about the partnership, highlighting its potential impact on SMEs and the overall economic landscape. He emphasized their commitment to providing affordable financing to support SMEs in Africa, particularly those focused on green and gender financing. The aim is to eliminate strict collateral requirements that often hinder women-focused businesses from accessing credit.

The CEO of African Guarantee Fund Group, Jules Ngankam, expressed his gratitude for the longstanding partnership between AGF and Ecobank Group. He emphasized the positive impact this partnership has had on the SME landscape, stating that it is proof of the importance of risk-sharing mechanisms for banks to grow their SME portfolio. This renewed partnership will result in close to $1 billion of financing for SMEs, which are the true drivers of growth in African economies.

Furthermore, Ngankam highlighted that Ecobank’s “Ellevate” program will greatly benefit from their “AFAWA Guarantee for Growth” facility, which aims to boost financing for women-led or owned SMEs.

This $200 million risk-sharing agreement is set to become a significant initiative in the financial landscape of Sub-Saharan Africa. It showcases the collaborative efforts of key players in driving economic growth and fostering entrepreneurship. The partnership covers 27 countries, listed in alphabetical order: 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.