The Pan-African Banking Group, Ecobank, and the Specialized Pan-African Guarantee Fund, AGF, have announced the signing of a $200 million risk-sharing agreement with the aim of stimulating economic development and promoting entrepreneurial initiatives, including those of women-owned small and medium-sized enterprises (SMEs) across the continent. The signing of the strategic partnership agreement took place the Lomé area of Togo, as part of the African Financial Industry Summit. The event was attended by representatives of both organizations.
This is the third time Ecobank and AGF have entered into a risk-sharing arrangement, with the previous agreement amounting to USD 200 million. The first AGF-facilitated guarantee was granted in 2013 covering 7 countries with a USD 50 million guaranteed portfolio. The scope of this guarantee was broadened in 2018 to include 14 countries with a cumulative USD 230 million disbursements since then. The renewed AGF-Ecobank risk-sharing arrangement covers 27 countries within the Ecobank African network, covering 50% of qualifying SMEs in all target markets.
The partnership brings together Ecobank’s network and financial expertise, combined with AGF’s experience in risk mitigation, to tackle the barriers SMEs face in accessing affordable finance. Highlights of the partnership: · Enhanced 75% Guarantee Cover for Gender Financing & Green Transactions: favourable terms are in place to accelerate the uptake of more women-led & green transactions with reduced pricing.
Increased Lending Capacity: The USD 200 million facility allows Ecobank to significantly boost its lending capacity to SMEs, enabling the Bank to extend more credit facilities to SMEs seeking to expand, innovate, and contribute to job creation.
Risk Mitigation: AGF will play a pivotal role in mitigating the credit risk associated with lending to SMEs, fostering a more conducive environment for financial institutions to support these businesses without compromising their risk profiles.
Financial Inclusion: By channeling funds towards SMEs, the collaboration aligns with broader financial inclusion objectives, ensuring that a diverse range of businesses, including those in underserved and remote areas, can access the financial resources needed for growth.
Economic Impact: The USD 200 million risk-sharing agreement is expected to have a ripple effect on various sectors, contributing to increased economic activity, job creation, and sustainable development across sub-Saharan Africa.
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. In doing so, we aim 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 and 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 catalyse close to $1 billion of financing for SMEs, who are the real drivers of growth in African economies.”
“Ecobank’s “Ellevate” program will also largely benefit from our “AFAWA Guarantee for Growth” facility to significantly boost financing of women led or owned SMEs,” he added.
The $200 million risk-sharing agreement is positioned 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. 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.