Ecobank, AGF sign $200m deal to boost SME lending
Ina landmark move to stimulate economic growth and bolster entrepreneurial ventures across the African continent, Ecobank, the leading pan-African banking group, and the African Guarantee Fund (AGF), a specialized pan-African guarantee provider, have announced a groundbreaking $200 million risk-sharing agreement.
The partnership, aimed at supporting SMEs with a particular focus on women-owned businesses, was formalized today on the sidelines of the Africa Financial Industry Summit (AFIS) in Lomé, Togo.
This collaboration marks the third renewal of the partnership between Ecobank and AGF, building on their successful track record of fostering financial support for SMEs.
The initial guarantee provided by AGF in 2013 covered seven countries with a total guaranteed portfolio of $50 million.
Subsequently, in 2018, the scope expanded to 14 countries, resulting in cumulative disbursements of $230 million.
The renewed partnership now extends its reach to 27 countries within Ecobank’s African network, offering 50% coverage for qualifying SMEs across all target markets.
By combining Ecobank’s extensive network and financial expertise with AGF’s proven track record in risk mitigation, the collaboration aims to address the challenges faced by SMEs in accessing affordable financing.
Key highlights of the partnership include an enhanced 75% guarantee cover for Gender Financing and Green Transactions.
Favourable terms have been established to fast-track transactions led by women and those focused on environmentally sustainable initiatives, incorporating reduced pricing.
The $200 million facility enables Ecobank to significantly boost its lending capacity to SMEs, facilitating the extension of credit facilities to businesses seeking to expand, innovate, and contribute to job creation.
AGF will play a pivotal role in mitigating the credit risk associated with lending to SMEs, creating a conducive environment for financial institutions to support these businesses without compromising their risk profiles.
Commenting on the partnership, Ecobank Group CEO, Jeremy Awori, expressed enthusiasm about the potential impact on SMEs and the overall economic landscape, stating, “Our enhanced partnership with the African Guarantee Fund marks a significant step forward in our commitment to supporting SMEs across Africa with affordable financing.
“Through this partnership, we are taking bold steps to enhance green financing and gender financing, aiming to eliminate the rigorous and restrictive requirements for collateral, particularly hindering women-focused businesses’ access to credit.”
African Guarantee Fund Group CEO, Jules Ngankam, acknowledged the longstanding partnership between AGF and Ecobank Group, emphasizing its transformative impact on the SME landscape.
“The renewal of our partnership with Ecobank Group to now span 27 countries is proof of the importance of risk-sharing mechanisms that banks should leverage to grow their SME portfolio.
“This partnership will catalyze close to $1 billion of financing for SMEs, who are the real drivers of growth in African economies.”
He added, “Ecobank’s “Ellevate” program will also largely benefit from our “AFAWA Guarantee for Growth” facility to significantly boost financing for women-led or owned SMEs.”
The $200 million risk-sharing agreement is poised to become a landmark initiative in the financial landscape of Sub-Saharan Africa, demonstrating the collaborative efforts of key players in driving economic growth and fostering entrepreneurship.
The countries covered in the partnership, listed in alphabetical order, are Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Congo, Côte d’Ivoire, Democratic Republic of Congo, Equatorial Guinea, Gabon, Ghana, Guinea Bissau, Guinea Conakry, Kenya, Mozambique, Nigeria, Rwanda, Senegal, Sierra Leone, South Sudan, Tanzania, Togo, Uganda, Zambia, and Zimbabwe.
