AfDB to support Africa’s SMEs

THE African Development Bank (AfDB) has launched the African Guarantee Fund (AGF), a scheme aimed at easing access to finance among Small and Medium Enterprises (SMEs) in Africa.The initiative launched by AfDB President, Dr. Donald Kaberuka, during the Bank’s annual meeting in Arusha, Tanzania last week will provide financial guarantees to financial institutions to stimulate financing to SMEs and unlock their potential to deliver inclusive growth in the region.The scheme was designed and funded by the AfDB in partnership with the governments of Denmark and Spain. This is a public-private partnership comprising of other donors, development finance institutions and private investors expected to provide additional capital and scale up its operations.AfDB said in a statement that; “SMEs are the best candidates to achieve inclusive growth in Africa as they contribute significantly to income generation and job creation.” It added that financial access is consistently reported as one of the major obstacles to SME’s growth and development. Only 20 percent of African SMEs have a line of credit from a financial institution, it said, adding that the AGF will help fill this gap.Kaberuka praised the Danish and Spanish governments for their continued support for the initiative, especially in times of fiscal austerity, and celebrated a two-year long successful partnership triggered by the Africa Commission’s recommendation in 2009 to implement the AGF as one of the initiatives to address youth unemployment in the continent.He said: “The African Development Bank is strongly committed to promote inclusive private sector-led growth and employment creation across the continent. Accordingly, it always looks at innovative and efficient modes of financing to reach out to SMEs. The AGF will contribute to rationalise the provision of financial guarantees for the purpose of mobilising financial resources for SMEs. Likewise, the AGF will complement other Bank’s products and services for private sector development through SMEs.” He also urged the development community and the private sector to join the AGF and contribute to its success.During the session, which brought together African and international entrepreneurs, representatives from banks, financial institutions, investment funds, central banks, and government agencies, the official AGF logo was unveiled and the AGF’s features and expected developmental impact on Africa presented.

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AfDB to support Africa’s SMEs