Sub-Saharan SMEs to be Backed by Ecobank, African Guarantee Fund
The African Guarantee Fund (AFG) and Ecobank Transnational Incorporated — a Pan-African banking group — have joined forces to provide financial support for SMEs across Africa, Leadership reported.
About 20 percent of SMEs in Africa manage to lock down credit lines and loans from large financial institutions halting development and growth of business According to Leadership, officials from both institutions have recognized that the numbers are not satisfactory.
Nigeria, Benin, Cameroon, Burkina Faso, Côte d’Ivoire, the DRC and Kenya are countries that will benefit from the project.
“The partnership with Ecobank is of great significance as it provides the Africa Guarantee Fund (AGF) with a very important Pan-African banking network through which African small and medium-sized enterprises (SMEs) will be assisted in getting increased access to financing,” Felix Bikpo, AGF chief executive officer, said in the report. “This partnership is another manifestation of AGF’s role as the missing link to increasing the financing of African SMEs by banks and non-bank financial institutions.”
SMEs within financing programs that qualify or prove to be “viable,” will receive a partial guarantee — funded by AGF — for 50 percent of net loss of principal, according to Leadership.
“This agreement reaffirms Ecobank’s commitment to support small and medium-sized businesses and our collaboration with Africa Guarantee Fund will further enable the SME sector play a critical role in the socio-economic development of Africa,” Ecobank Group CEO, Thierry Tanoh added.
Prior to and during establishing financial windows for SMEs, Ecobank oversaw a programs which connected business owners to established SMEs across Africa offering “knowledge, advide and exposure,” Leadership reported.
According to Domestic Bank group executive director, Patrick Akinwuntan, nurturing SMEs is essential because their development is connected to middle class resurgence. He also said that financial opportunities within the Pan-African SME community would expand and eventually deepen.
“Ecobank recognizes that the SME and medium- sized enterprises sector has significant growth potential,” he said noting that a substantial employment pool will be created from the partnership.