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African Guarantee Fund on Monday received a capital increase of Sh2.145 billion (USD 20 million) from the Danish Investment Fund for Developing Countries (IFU) to facilitate green SME financing in Africa.
The capital increase is partially financed by the Danish Government, as part of the Danish “COVID-19 Development Assistance” package. Including the additional Sh2.1 billion, the total Danish investment in AGF amounts to Sh7.7 billion.
The capital increment into the African Guarantee Fund will increase the Fund’s capacity to unlock financing for Small and Medium Enterprises (SMEs) in Africa. SMEs in the continent have experienced a deterioration in their creditworthiness as a result of the economic impact of Covid-19.
The United Nations Economic Commission for Africa 2020 survey reports business closure, lack of operational cashflow and a drop in demand as the top challenges facing African SMEs as a result of the pandemic.
“The initial Danish capital injection into the African Guarantee Fund not only generated economic and social impact but also helped to attract more capital from other Development Finance Institutions,” said AGF’s CEO, Jules Ngankam.
“With this capital increment, our capacity to offer more green guarantees to financial institutions is enhanced and will facilitate sustainable financing for green transition in Africa,” he said
“Private SMEs are vital for creating and safeguarding decent jobs in Africa, but they face huge challenges in the Covid-19 crisis. We are confident that our investment will attract other investors to exploit the proven potential of SMEs in Africa,” said IFU’s CEO, Torben Huss.
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