Business Entrepreneurship SME

AfDB Sh 218 Billion Credit Facility to fund Women Based SMEs in Africa

Prowess

African Development Bank (AfDB) launched a Sh218 Billion Credit Facility aimed to fund Women Based SMEs in Africa including Kenya. 

AfDB will work with AGF (African Guarantee Fund) to distribute the funding through banks in  the AFAWA programme. African Guarantee Fund offers partial insurance for loans to SMEs. 

Banks in Kenya, Tanzania, Uganda, Cameroon, Rwanda and DRC are signing into AFAWA (Affirmative Finance Action for Women in Africa).

According to Jules Ngankam, AGF CEO, AGF as AFAWA’s Guarantee for Growth programme implementing partner are already observing an increased desire from banks for this innovative product that seeks to support women entrepreneurs. 

“We have recently signed agreements with leading banks on the continent who are keen to increase their women SMEs portfolio.” Jules Ngankam.

It is anticipated that the project will reach an average of 18,000 small and medium-sized women and generate 80,000 direct jobs.

African women face a funding deficit of $42 billion (Sh4.6 trillion). Mainly, this is due to a lack of collateral access in the form of land and properties. This also includes lack of expertise, mentorship, and networks to grow their businesses, which are usually in the informal sector. 

Guarantee for Growth, backed by the Group of Seven (G7) countries as well as the Netherlands and Sweden, has three pillars. One, boosting access to finance. Two, providing financial institutions and women business owners with technical assistance. Three, improving the enabling climate for SMEs for women.

In Kenya:

AGF usually guarantees a single SME borrower half the value of the loan balance. Alternatively it guarantees half the value of the unpaid SME loan portfolio. It then charges banks a risk guarantee fee of between 1.5 percent and three percent.

The program will expand on the current business of AGF in Kenya and other markets. NCBA and Ecobank include some of the local lenders that have signed loan guarantee deals with AGF.

Sourced from Business Daily