The African Guarantee Fund (AGF) has partnered with Swiss-based ResponsAbility Investments AG to promote small businesses in Kenya through a Sh600 million partial guarantee scheme.
Dedicated to promoting the financing of Small and Medium Enterprises (SMEs) in the African agricultural value chain, the lending loan portfolio guarantee facility (Sh609.9 million) comes as Africa's agri-SMEs are grappling with numerous challenges hindering them from achieving their full potential.
This includes poor financing, the ability to attract and retain qualified employees, limited access to information, connections as well as limited access to markets.
The firm as a result said the AGF-ResponsAbility partnership is expected to play a critical role in bridging the estimated Sh9 trillion ($74 billion) annual financing gap facing Agriculture SMEs in sub-Saharan Africa.
AGF Group Chief Executive Jules Ngankam recently said the partnership demonstrates the fund's commitment to the continent's sustainable development by supporting agri-SMEs to increase their productivity and enabling them to adapt to the changing environment.
"Agri-businesses tend to have higher risk profiles and limited cash flow compared to equivalent SMEs in other sectors. Our risk-sharing partnership will allow ResponsAbility to scale up lending activities to agribusinesses across Africa enabling agri-SMEs to play a bigger role in connecting different components along the food production value chain," Ngakam added.
ResponsAbility Country Director for Kenya Michael Fabbroni said the partnership reflects the alignment of values in fostering a sustainable agricultural sector.
"Additionally, it shares our vision of Africa's key role in future global food production," Fabbroni noted.
AGF said ResponsAbility will use the guarantee facility to increase lending to women-owned agribusinesses as well as climate-focused businesses involved in energy efficiency, renewable energy, natural resource management and climate insurance.