Proparco has invested $10 million to the African Guarantee Fund (AGF) in order to support the Affirmative Finance Action for Women in Africa (AFAWA) initiative, which aims to improve women’s access to capital.
The AFAWA is a joint initiative of the African Development Bank and the African Growth and Development Fund, which was launched in 2016 and is backed by France and the G7 countries.
It aims to close the financing gap affecting African women by increasing the volume of loans provided to them (financing component), building the capacity of women entrepreneurs and providing advisory services to financial institutions that serve them (technical assistance component), and engaging with stakeholders to remove barriers to their success (engagement component) (business environment component).
The financing component is implemented in particular by AGF, which provides risk-sharing mechanisms to financial institutions in order to better serve SMEs. The $10 million equity investment in AGF, made through AFD Group’s FISEA+ facility, will help the company accomplish the AFAWA initiative’s goals.
Grégory Clemente, CEO, Proparco: “Risk-sharing mechanisms are among the most effective tools for meeting the challenge of financing small and medium-sized enterprises. Proparco is proud to further commit to strengthening them within the framework of the AFAWA initiative, whose ambition to promote women’s entrepreneurship is commensurate with the challenge it represents for the development of the African continent.”
AGF is committed to implementing the criteria of the 2X Challenge project, which aims to boost women’s economic involvement in emerging and developing nations, as part of this AFAWA campaign to target women entrepreneurs.
This project, which was launched in 2018 by the G7 Development Finance Institutions (DFIs) and now includes more than 15 DFIs, has set a new aim in 2021 to mobilize $15 billion by the end of 2022. More than 14 000 MSMEs are expected to benefit from AGF Group’s investment, which would support more than 120 000 direct and indirect jobs.
Jules Ngankam, General Manager, AGF: “SMEs in Africa face a range of difficulties that hinder their growth, the main one being access to finance. This financing challenge is heightened when it comes to women-led SMEs, as these SMEs are perceived to be riskier and therefore face prohibitive interest rates.
In addition, due to certain legal frameworks still in place, women sometimes have difficulties in accessing assets that can be used as collateral. Through this capital increase, AGF will further support women’s entrepreneurship by improving the conditions of access to finance and building the capacity of women entrepreneurs.”