The African Development Bank’s (AfDB) Affirmative Finance Action for Women in Africa (AFAWA) program has partnered with the African Guarantee Fund (AGF) to provide $1.3 to 2 billion in loans to women-owned Small and Medium Sized Enterprises (SMEs) in Africa.
According to the press release by AfDB, this is going to be done by working with financial institutions to enhance their ability to lend to women. So far, financial institutions in Cameroon, Democratic Republic of Congo, Kenya, Rwanda, Tanzania and Uganda are signing on to the program.
Additionally, 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.
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.
African Guarantee Fund is a non-bank financial institution whose objective is to promote economic development, increase employment and reduce poverty in Africa by providing financial institutions with guarantee products as well as capacity development assistance, specifically intended to support SMEs in Africa. As such it is poised to meet its obligations to the partnership.
Jules Ngankam, African Guarantee Fund’s Group Chief Executive Officer (CEO) asserted that “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”.
“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”.
Jules Ngankam
On her part, Stefan Nalletamby, AfDB Director of Financial Sector Development intimated that “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“.
Esther Dassanou, AFAWA’s Coordinator, sharing her thoughts opined that “There is an urgent need to improve the enabling environment with the right regulations in place, to sustainably de-risk the segment,” adding that, “The Bank will work with regulators to reform the legal and regulatory frameworks affecting women businesses’ access to finance”.
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 revealed.
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, the report noted.
The AfDB Director for Gender, Women and Civil Society, Vanessa Moungar posited that “Donor and private sector-support for the overall AFAWA initiative is helping the Bank set ambitious targets for AFAWA Guarantee for Growth program.
“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 mentioned.
