Ecobank and the African Guarantee Fund (AGF), a specialized pan-African guarantee provider, have inked a USD 200 million risk-sharing agreement.
The deal, signed on the sidelines of the Africa Financial Industry Summit in Lomé, Togo, is the biggest risk sharing agreement on the continent providing support to SMEs (Small and Medium Enterprises) and focusing on women-owned businesses.
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“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, aiming to eliminate the rigorous requirements for collateral hindering women-focused businesses’ access to credit,” Said Jeremy Awori, Ecobank Group CEO.
The new deal marks the third renewal of the partnership between Ecobank and AGF. The initial guarantee, initiated in 2013, covered seven countries with a total guaranteed portfolio of USD 50 million. Over the years, the scope has expanded, and the renewed partnership now extends to 27 countries within Ecobank’s African network, offering 50 percent coverage for qualifying SMEs across all target markets.
Key highlights of the partnership include an enhanced 75 percent guarantee cover for Gender Financing and Green Transactions, with favorable terms to fast-track women-led and environmentally conscious transactions. The collaboration will leverage Ecobank’s extensive network and financial expertise, along with AGF’s proven track record in risk mitigation, to address the challenges faced by SMEs in accessing affordable financing.
African Guarantee Fund Group CEO, Jules Ngankam, acknowledged the longstanding partnership between AGF and Ecobank Group stating “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 catalyze close to $1 billion of financing for SMEs, who are the real drivers of growth in African economies,”
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The risk-sharing facility will significantly boost Ecobank’s lending capacity to SMEs, enabling the bank to extend more credit facilities to businesses seeking to expand, innovate, and contribute to job creation. AGF will play a role in mitigating the credit risk associated with lending to SMEs, creating a more conducive environment for financial institutions to support these businesses without compromising their risk profiles.
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