The African Export-Import Bank (Afreximbank) and African Guarantee Fund (AGF) have signed an agreement for a $30 million re-guarantee facility in support of African small and medium-sized enterprises (SMEs).
The facility is designed for SMEs in the trade value chain to access funds for their activities.
The Director, Trade Finance, Afreximbank signed the agreement on behalf of the bank, while the Chief Risk Officer of AGF, Constant Nzi, signed for AGF, during a ceremony held on the sidelines of the recently-concluded Intra-African Trade Fair in Cairo, Egypt.
According to a statement by Afreximbank, the agreement provides for the facility to be used to support the financing needs of African SMEs by enhancing their access to long-term financing, thereby acting as a catalyst to enable them to grow, create more jobs, sustain the existing labour force and develop intra-African and extra-African trade.
The re-guarantee facility is aimed at providing comfort to financial institutions in lending to SMEs, which tend to be regarded as a risky segment; enabling the financial institutions to transform their short-term deposits into long-term financing to SMEs; and supporting Afreximbank’s SME support initiative and AGF strategic plan.
The facility is expected to support positive social-economic changes among the more than 6,000 SMEs that are expected to gain access to guaranteed loans from African local banks, thereby contributing to trade development, economic growth and poverty reduction.