SMEs get boost as Ecobank, AGF signs $50m

The lack of access to finance and high unemployment rate which has bedeviled the economy is expected to reduce as Ecobank Transnational Incorporated and the African Guarantee Fund (“AGF”) Tuesday signed a $50 million portfolio guarantee to promote and support small businesses across Sub-Saharan Africa.
Under the terms of this USD 50 million agreement, the two institutions will work together to unlock the potential of Small and Medium Enterprises (SMEs) in Benin, Burkina Faso, Cameroon, Côte d’Ivoire, the DRC, Kenya and Nigeria to deliver inclusive growth.
The inaccessibility of finance is a major obstacle to small business growth and development, with only 20 percent of African SMEs receiving a credit line from a financial institution. This agreement aims to assist viable SMEs by providing an AGF-backed partial guarantee for 50percent of net losses of principal under the loan facilities extended to customers in the value chain of SME financing programmes, including Contract & Receivables Finance, Distributorship Finance and Asset Finance.
Commenting on the transaction, Thierry Tanoh, Ecobank Group Chief Executive Officer, said: “This agreement reaffirms Ecobank’s commitment to support small and medium-sized businesses and our collaboration with Africa Guarantee Fund will further enable the SME sector play a critical role in the socio-economic development of Africa.”
Speaking at the signing ceremony in Lagos, Patrick Akinwuntan Group executive director, domestic bank, said, Ecobank recognizes that the SME and Medium sized enterprises sector has significant growth potential, represents Africa’s ‘rising middle’ and provides the largest employment pool for our vibrant population. “This agreement leverages our unrivalled pan-African footprint to deepen financial inclusion in Africa, he said.”
Also speaking, Felix Bikpo, Chief Executive Officer of AGF said the partnership with Ecobank is of great significance as it provides the Africa Guarantee Fund with a very important Pan-African Banking network through which African Small and Medium Sized Enterprises (SMEs) will be assisted in getting increased access to financing.
“This Partnership is another manifestation of AGF’s role as the missing link to increasing the financing of African SMEs by banks and non-bank financial institutions”.

Source Businessday