The African Guarantee Fund for Small and Medium-Sized Enterprises (AGF) has entered into a re-guarantee transaction of $74 million (Sh7.4 billion) with GuarantCo, to increase its guarantee capacity for SME financing.
With the increased capacity, AGF will be able to support larger local currency transactions for SMEs involved in infrastructure.
ALSO READ: Eurobond: Fodder for politicians
SMEs have a large and growing impact on GDP in emerging markets and are a key source of job creation while strengthening Africa’s infrastructure is critical for development as it is through this that countries become more competitive at a global level.
Over the past six years, AGF has led the guarantee market in Africa by issuing financial guarantees $690 million (Sh69 billion). This has enabled its partner financial institutions to issue loans estimated at $729 million (Sh72.9 billion) to about 7,600 African SMEs.
GuarantCo is part of the Private Infrastructure Development Group and is a global guarantee fund with a mandate to enable local currency finance for infrastructure.
AGF Chief Executive Felix Bikpo said the firm was glad to partner with GuarantCo in bridging the infrastructure financing gap.
“This partnership aims to put in place an even stronger collaboration that will work on the entire value chain of infrastructure projects in Africa. We are looking forward to supporting other SMEs that work with key players in the infrastructure sector,” he said.
The transaction will enable AGF and GuarantCo to explore further partnership opportunities of working together in contributing towards economic growth in Africa.