ABIDJAN, Ivory Coast, February 12, 2021/APO Group/ —
The African Development Bank’s (www.AfDB.org) Affirmative Finance Action for Women in Africa (AFAWA) program has agreed a partnership with the African Guarantee Fund (AGF) to unlock $1.3 to 2 billion in loans to women-owned Small and Medium Sized Enterprises (SMEs) in Africa, by working with financial institutions to enhance their ability to lend to women.
The move signals the launch of AFAWA’s Guarantee for Growth (G4G) program, which aims to make available up to $3 billion in financing for women entrepreneurs through de-risking and technical assistance measures. Already, financial institutions in Cameroon, Democratic Republic of Congo, Kenya, Rwanda, Tanzania and Uganda are signing on to the program.
“As the implementing partner of AFAWA’s Guarantee for Growth program, we are already observing an increased appetite from banks for this 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,” said Jules Ngankam, African Guarantee Fund’s Group CEO.
“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,” Ngankam added.
Guarantee for Growth, 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.
“The signing of the AFAWA Guarantee for Growth program with the African Guarantee Fund is a critical milestone for the Bank to successfully deploy on-the-ground financing instruments better suited to addressing the financing and training needs of women-owned small and medium enterprises in Africa for the growth of their businesses,” said Stefan Nalletamby, the Bank’s Director of Financial Sector Development.
“There is an urgent need to improve the enabling environment with the right regulations in place, to sustainably de-risk the segment,” said Esther Dassanou, AFAWA’s Coordinator. “The Bank will work with regulators to reform the legal and regulatory frameworks affecting women businesses’ access to finance,” she added.
The Guarantee for Growth is also expected to reach an average of 18,000 women small and medium enterprises and create 80,000 direct jobs, Dassanou said.
African women face a $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 Vanessa Moungar, the Bank’s Director for Gender, Women and Civil Society. “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 added.