IFC has announced an investment in a risk-sharing facility for the Bank of Africa Group (BOA) to support economic activity and job creation in ten countries across Sub-Saharan Africa, including those in fragile and conflict-affected countries and the Sahel.
IFC will invest $77 million in the risk-sharing facility to expand BOA’s lending to SMEs, including women-owned businesses, in Benin, Burkina Faso, Côte d’Ivoire, Ghana, Madagascar, Mali, Niger, Senegal, Tanzania, and Togo. The IFC investment will guarantee 50% of a total loan portfolio of up to $154 million to businesses in agriculture, trade, energy, construction, and other industries.
BOA expects to make 12,000 new loans through the facility, at least 2,000 of which will be to women-owned businesses, which frequently face greater barriers to financing. IFC will also provide advisory services to BOA to help it strengthen its portfolio of women-owned SMEs across its ten affiliates.
“One of our strategy’s three pillars is asset transformation to increase our exposure to SMEs. Indeed, we are convinced that SMEs play a critical role. We appreciate IFC’s initiative, which will enable BOA to increase the strength and confidence of our SMEs penetration “BOA Group Chief Executive Officer Amine Bouabid stated.
“Increasing access to finance for SMEs is critical at a time when macroeconomic headwinds and supply chain disruptions are stifling growth, innovation, and economic activity in Africa, particularly in fragile, conflict-affected, and low-income countries,” Aliou Maiga, IFC’s Regional Industry Director for the Financial Institutions Group in Africa, said. “The IFC’s expanding partnership with BOA reflects our strategy to support financial inclusion, credit access, and, more broadly, private sector development on the African continent.”
“As we mark the 15th anniversary of Goldman Sachs 10,000 Women, we are delighted to continue to empower female entrepreneurs to accelerate growth and recharge their businesses through access to capital,” said Charlotte Keenan, Global Director of Goldman Sachs 10,000 Women. “We are excited to help Bank of Africa Group expand lending to women-owned businesses across Sub-Saharan Africa.”
SMEs are the backbone of African economies, accounting for up to 90 percent of all businesses in Sub-Saharan Africa and accounting for 38 percent of the region’s GDP. Many SMEs, however, are hampered by a lack of access to finance. According to World Bank enterprise survey data, the SME finance gap in the ten target countries is $21 billion, and 53 percent of SMEs are credit constrained in some way.
The Global SME Finance Facility (GSMEF), a blended finance partnership with donor funding from the United Kingdom and the Dutch Government; the Women Entrepreneurs Finance Initiative (We-Fi); and the Women Entrepreneurs Opportunity Facility, which IFC launched through its Banking on Women Program and Goldman Sachs 10,000 Women, all contribute to IFC’s investment.
The announcement builds on a multi-country risk-sharing facility established by IFC and BOA in 2018 with the support of GSMEF to encourage small business growth in eight African countries.
The project also aligns with the IFC’s pledge to help close the financing gap for SMEs in Sub-Saharan Africa as part of the Alliance for Entrepreneurship in Africa.