Small and medium enterprises based in West Africa are poised to benefit from an injection of capital and technical assistance from a USAID-funded scheme through the African Guarantee Fund valued at over $20 million.
The largesse to SMEs in the region was informed by the realisation that limited access to capital remains a serious impediment to their growth, a situation compounded by the ongoing coronavirus pandemic.
In a statement to APA, USAID said in a bid to reverse this torrid scenario for SMEs in West Africa, and the companies that finance them, the AGF, a leading non–banking financial institution which it funds, will leverage this grant, as well as $20 million of private equity, to support its two–part COVID–19 Guarantee Facility.
The combined $22.5 million co–investment will allow AGF to absorb additional pandemic–related risk and provide guarantees to its partner financial institutions (PFIs) on more favorable terms and conditions while remaining financially sustainable, the statement said.
Using the COVID–19 Guarantee Facility, AGF will be issuing loan guarantees to 30 partner financial institutions (PFIs), allowing them to unlock up to $160 million in financing for approximately 3,000 West Africa–based SMEs affected by the pandemic.
It will also provide technical assistance to PFIs and SMEs benefiting from the COVID–19 Guarantee Facility to accelerate their post–pandemic recovery.
The COVID–19 Guarantee Facility will look to help SMEs create 15,000 new jobs, maintain 20,000 existing ones, and collectively generate $100 million in sales and $8 million in exports.
“Despite the internationally recognized importance of SMEs, African small businesses often have difficulties accessing financing for growth and innovation from the formal financial sector. Over the past two years, SME financing challenges have further escalated due to economic uncertainties brought about by the impact of the pandemic,” Jules Ngankam, AGF’s Group Chief Executive Officer was quoted by the statement as saying.
According to Ngankam the Facility is a direct response to this challenge, and they are thrilled by the partnership with the USAID West Africa Trade Hub to increase their capacity in bridging the SME financing gap through this innovation.
Robin Wheeler, the Trade Hub’s chief said similar partnerships with Cordaid Investment Management and CrossBoundary, launched in 2021, are already showing success in bringing together the partners, capital, and resources for a stable environment required for SMEs to grow and make a positive impact in the region.
Thanks to such a financial injection, the owners of West Africa–based business concerns are poised to gain much–needed access to capital to not only survive, but thrive during the pandemic.
WN/as/APA