The African Development Bank Group (AfDB) is partnering with the African Guarantee Fund (AGF) to reduce the $42 billion Small and Medium Enterprises (SMEs) funding gap in Africa. AfDB’s Director General of Nigeria Country Department Mr. Lamin Barrow, disclosed this at the start of the 5th Affirmative Finance Action for Women in Africa (AFAWA) Finance Series in Nigeria. He said that the AFAWA initiative aims to improve access to finance for African women, specifically by closing the existing financing gap for female-led SMEs through the mobilization of $5 billion in new funding within the next 3 years. Mr. Barrow explained that the programme had approved $1.2 billion for on-lending to women-led enterprises in 32 countries across Africa since its launch over 2 years ago.
AGF’s Group Chief Executive Officer, Jules Ngankam listed some of the hurdles faced by SMEs on the continent to be inadequate skills; lack of collateral to access loans; information/products gaps for operators and an unfavorable perception by financial institutions. Tackling these he said would promote women-led SMEs access to credit, stating that 70 per cent of African women are financially excluded in this area; as well as in land ownership, job opportunities, leadership positions and wealth creation. He believes this imbalance is one of the many factors limiting Africa from maximizing its full potential. Mr Ngankam commended the Federal Government for supporting female-led SMEs and promised AGF’s preparedness to collaborate with it through the AFAWA initiative, to make the Nigerian business environment more conducive for women entrepreneurs.
The Minister of Finance and Co-ordinating Minister of the Economy Mr. Wale Edun noted that women’s full and equal participation in the economy is a matter of economic parity that transcends social justice. He emphasized that the issue of women empowerment demands the collective attention and commitment of all stakeholders to ensure that women have equal opportunities for full involvement in the country’s economic growth. He was represented at the event by the Acting Permanent Secretary/Director, Economic Research and Policy Management Department, Federal Ministry of Finance, Grace Ogbonna.
The AGF is a development financial institution that operates with the primary objective of facilitating access to finance for SMEs in Africa to boost job creation and reduce poverty. It catalyzes funding to SMEs from the formal financial sector by: providing credit guarantees and other financial instruments for SMEs; organizing capacity building initiatives; risk sharing with banks/other financial institutions on loans availed to SMEs and operating public-private partnerships.
So far, it has facilitated the availability of more than $2.7 billion in private capital, with 181 partner financial institutions implementing its guarantee products across 40 countries in Africa. Since inception, over 28,000 SMEs (8,000+ women-led; 2,500+ agribusinesses) have gained access to income-enhancing loans, which exceeded $800 million to female-led businesses alone. SMEs benefiting from AGF guarantees have created approximately 189,000 direct jobs. The AGF is the implementing partner for the AFAWA Initiative, a joint collaboration with the AfDB.
