To support African small and medium-sized enterprises (SMEs) in the trade value chain to access funds for their activities, the African Export-Import Bank (Afreximbank) has signed an agreement with the African Guarantee Fund (AGF) for a $30 million re-guarantee facility.
Director of Trade Finance, Gwen Mwaba signed the agreement on behalf of Afreximbank, while Constant Nzi, Chief Risk Officer of AGF, signed for the Fund. The signing took place on the sidelines of the recently concluded Intra-African Trade Fair in Cairo, Egypt.
The agreement signed by the two institutions, highlights that the facility will be used to support the financing needs of African SMEs by enhancing their access to long-term financing, thereby acting as a catalyst to enable them to grow, create more jobs, sustain the existing labour force and develop intra-African and extra-African trade.
The re-guarantee facility is designed to provide comfort to financial institutions in lending to SMEs, which tend to be regarded as a risky segment. The initiative will enable financial institutions transform their short-term deposits into long-term financing to SMEs, an initiative which will facilitate Afreximbank’s SME support initiative and AGF strategic plan.
The facility is expected to support positive social-economic changes among the more than 6,000 SMEs that are expected to gain access to guaranteed loans from African local banks, thereby contributing to trade development, economic growth and poverty reduction.