Ecobank, African Guarantee Fund Sign Transformative $200m Risk-Sharing Agreement
Ecobank and the African Guarantee Fund (AGF), have signed a $200 million risk-sharing agreement, aimed at catalyzing economic growth and supporting entrepreneurial ventures – including women-owned (SMEs) on the continent.
The two organisations signed the partnership agreement on the sidelines of the Africa Financial Industry Summit (AFIS) in Togo, in the presence of their respective leaders.
The $200 million risk-sharing agreement marks the third renewal of Ecobank’s partnership with African Guarantee Fund, as the initial guarantee, provided by AGF in 2013, covered seven countries with a total guaranteed portfolio of $50 million.
Speaking on the partnership, Ecobank Group CEO, Mr. Jeremy Awori in a statement expressed his delight about the potential impact on SMEs and the overall economic landscape.
Awori said “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.”
The Chief Executive Officer, African Guarantee Fund Group, Jules Ngankam applauded the long-lasting partnership between AGF and Ecobank Group and its transformative impact on the SME landscape.
Ngankam said “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.”
The scope of the guarantee expanded in 2018 to include 14 countries, resulting in cumulative disbursements of $230 million since that time. The renewed partnership now extends to 27 countries within Ecobank’s African network, offering 50 coverage for qualifying SMEs across all target markets.
The Ecobank’s extensive network and financial expertise and collaboration with AGF’s proven track record in risk mitigation, aim to address the challenges faced by SMEs in accessing affordable financing.
Significant highlights of the partnership include: enhanced 75per cent guarantee cover for Gender Financing and Green Transactions: Favourable terms have been set to ensure more women-led and green transactions are fast-tracked, incorporating reduced pricing.
Increased Lending Capacity: The $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.
The $200 million risk-sharing agreement is projected to have a ripple effect on various sectors, thereby contributing to increased economic activity, job creation, and sustainable development across sub-Saharan Africa.
The risk-sharing agreement is aimed at becoming 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 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.
