The German development bank KfW entered the African Guarantee Fund (AGF) at the end of the year with a stake of 25 million dollars. A cash flow thanks to which the pan-African SME guarantee institution has successfully closed the first round of raising $ 90 million from its fundraising campaign.
« The capital increase has allowed AGF to acquire more capacity to deal with the financing barrier, which remains a major challenge for African SMEs, » said Felix BIKPO, the institution’s managing director in a statement. « AGF will now be able to provide more guarantees and technical assistance to financial institutions, thereby generating further growth in the African SME sector, » he added.
« The institutional and economic strength of AGF, which is reflected in its AA- rating, makes AGF an ideal partner for African commercial banks ready to finance SMEs. Our investment in AGF is part of KfW’s strategy to promote private investment and financial markets in Africa, « said Thomas Duve, KfW’s regional fund manager.
$ 1.6 billion for SMEs in 6 years
AGF’s goal is to leverage $ 320 million in additional capital over the next 4 years to reduce the estimated SME financing gap of more than $ 155 billion.
Over the last six years, the institution has provided guarantee products to more than 100 financial institutions, providing $ 1.6 billion in financing for SMEs in 39 African countries.
As the first pan-African financial institution to provide financial structures with collateral and other similar or related financial products specifically designed to support SMEs in Africa, in December 2017 AGF obtained the AA- rating from Fitch Ratings. It has among its shareholders, among others, the ADB and development agencies such as AFD (France) and DANIDA (Denmark).