Ecobank, AGF sign $200m deal to fund SMEs

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Ecobank, the leading pan-African banking group, and the African Guarantee Fund, a specialised pan-African guarantee provider, have signed a $D200m risk-sharing agreement.

The partnership is aimed at catalysing economic growth and supporting entrepreneurial ventures – including women-owned SMEs on the continent.

The two organisations signed a strategic partnership agreement Thursday on the sidelines of the Africa Financial Industry Summit in Lomé, Togo, in the presence of their respective leaders.

The $200m risk-sharing agreement marks the third renewal of Ecobank’s partnership with AGF. The initial guarantee, provided by AGF in 2013, covered seven countries with a total guaranteed portfolio of $50m.

In 2018, the scope of the guarantee expanded to encompass 14 countries, resulting in cumulative disbursements of $230m since that time. The renewed partnership now extends to 27 countries within Ecobank’s African network, offering 50 per cent coverage for qualifying SMEs across all target markets.
By leveraging Ecobank’s extensive network and financial expertise and merging it with AGF’s proven track record in risk mitigation, the collaboration aims to address the challenges faced by SMEs in accessing affordable financing.

The fund will foster a more conducive environment for financial institutions to support these businesses without compromising their risk profiles.

’By channelling 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.

Commenting on the partnership, Ecobank Group CEO, Jeremy Awori expressed enthusiasm about the potential impact on SMEs and the overall economic landscape, stating, “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.”

African Guarantee Fund Group CEO, Jules Ngankam acknowledged the longstanding partnership between AGF and Ecobank Group and its transformative impact on the SME landscape: “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,” he added.

The $200 million risk-sharing agreement is positioned to become 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, listed in alphabetical order, 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.