African SMEs set to benefit from $74m guarantee

SMALL and medium-sized enterprises in Africa’s infrastructure sector are set to benefit from an African Guarantee Fund facility worth $74 million.

This follows a re-guarantee transaction entered last week between the African Guarantee Fund for small and medium-sized enterprises (AGF) and GuarantCo, a company which provides guarantees for development.

This transaction means GuarantCo will now increase its guarantee capacity for SME financing for key players in the infrastructure sector.

According to a press release by the two organisations, SME’s have a large and growing impact on GDP in emerging markets and are a key source of job creation.

“Strengthening Africa’s infrastructure is critical for development as it is through this that African countries become more competitive at a global level.

“With this increased capacity, AGF will be able to support larger local currency transactions for SMEs involved in infrastructure.”

Over the past six years, AGF has led the guarantee market in Africa by issuing financial guarantees to a tune of $690 million.

This has enabled its partner financial institutions to issue loans estimated at $729 million to about 7 600 African SMEs.

GuarantCo is part of the Private Infrastructure Development Group, (PIDG), and is a global guarantee fund that has issued over $900 million of guarantees since inception in 2005 with a mandate to enable local currency finance for infrastructure.

While commenting on the GuarantCo AGF partnership, Felix BIKPO, AGF’s chief executive officer stated, “AGF is glad to be joined by 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.”

Lasitha Perera, GuarantCo’s chief executive officer said, “We are delighted to be able to partner with the African Guarantee Fund and increase support to SMEs active in the infrastructure sector in Africa.

“This collaboration between two local currency focused guarantors offers the potential for us to engage local financial institutions and investors in financing the entire value chain in an African infrastructure project.”

The transaction will enable AGF and GuarantCo to explore further partnership opportunities of working together in contributing towards economic growth in Africa.