AfDB unlocks US$2bn women SMEs loans

The African Development Bank (AfDB) through its ’Affirmative Finance Action for Women in Africa (AFAWA) initiative, has partnered with the African Guarantee Fund to unlock between US$1,3 billion and US$2 billion in loans for the continent’s women-owned Small to Medium Enterprises.

AfDB said the move signals the launch of AFAWA’s Guarantee for Growth (G4G) programme, which seeks to make available up to US$3 billion in financing for women entrepreneurs through de-risking and technical assistance measures.

“The AfDB’s Affirmative Finance Action for Women in Africa (AFAWA) programme has agreed a partnership with the African Guarantee Fund (AGF) to unlock US$1,3 to US$2 billion in loans to women-owned small and medium-sized enterprises in Africa, by working with financial institutions to enhance their ability to lend to women,” said the regional financial institution.

Already, financial institutions in countries such as Cameroon, Democratic Republic of Congo, Kenya, Rwanda, Tanzania and Uganda have signed on to the programme.

As the implementing partner of AFAWA’s G4G programme, the bank said it was already observing an increased appetite from banks for the above innovative product that seeks to support women entrepreneurs.

“We have recently signed agreements with leading banks on the continent who are keen to increase their women SMEs portfolio.

“AGF has always been cognizant of the importance of supporting women SMEs to enable them fully play their role as drivers of economic growth.

“We are glad the momentum is increasing and that banks are now willing to take on this particular business segment,” AfDB quoted African Guarantee Fund group chief executive officer Mr Jules Ngankam as saying.

G4G, which receives support from the Group of Seven (G7) countries as well as the Netherlands and Sweden, has three pillars: boosting access to finance, providing technical assistance to financial institutions and women business owners; and improving the enabling environment for women’s SMEs.

AfDB director of financial service sector development Mr Stefan Nalletambly said the signing of the AFAWA Guarantee for Growth programme with AGF is a critical milestone for the bank to successfully deploy on-the-ground financing instruments better suited to addressing financing and training needs of women-owned SMEs in Africa for the growth and development of their businesses.

The G4G is also expected to reach an average of 18 000 women SMEs and create 80 000 direct jobs.

AfDB said African women face a US$42 billion financing gap, which AFAWA aims to bridge.

This is tied to a lack of access to collateral in the form of land and property as well as to knowledge, mentorship, and networks to grow their businesses, which are typically in the informal sector.

“Donor and private sector-support for the overall AFAWA initiative is helping the Bank set ambitious targets for AFAWA Guarantee for Growth program,” said AfDB bank’s director for gender, women and civil society Ms Vanessa Moungar.

“The entire bank ecosystem will be at play – inviting more financial institutions to sign into the program – ensuring engagement, implementation, and ownership at the market and policy levels,” she said.

AGF is a non-bank financial institution whose objective is to promote economic development, increase employment and reduce poverty in Africa by providing financial institutions with guarantee products and capacity development assistance specifically intended to support SMEs in Africa.

The fund was founded by the government of Denmark through the Danish International Development Agency (DANIDA), the government of Spain through the Spanish Agency for International Cooperation and Development (AECID) and the African Development Bank (AfDB).

Other shareholders include: French Development Agency (AFD), Nordic Development Fund (NDF), Investment Fund for Developing Countries (IFU) and KfW Development Bank (KfW).-ebusinessweekly.coz.w