By JUDITH NAMUTOWE –
THE African Guarantee Fund (AGF) for small and medium-sized enterprises has entered into a re-guarantee transaction of upto US$74 million with GuarantCo aimed at increasing its guarantee capacity for Small and Medium Entreprenuers (SMEs) financing.
The SMEs have a large and growing impact on Gross Domestic Product (GDP) in emerging markets and were a key source of job creation.
Strengthening Africa’s infrastructure was critical for development as it is through this that African countries become more competitive at a global level.
GuarantCo is part of the Private Infrastructure Development Group (PIDG), and is a global guarantee fund that has issued over $900 million of guarantees since inception in 2005 with a mandate to enable local currency finance for infrastructure.
This is contained in a statement issued in Lusaka on Friday.
“With this increased capacity, AGF will be able to support larger local currency transactions for SMEs involved in infrastructure,” states the statement.
Over the past six years, AGF has led the guarantee market in Africa by issuing financial guarantees to a tune of $690 million.
This has enabled its partner financial institutions to issue loans estimated at $729 million to about 7,600 African SMEs.
AGF chief executive officer, Felix Bikpo said AGF was glad to be joined by GuarantCo in bridging the infrastructure financing gap on the continent.
“ This partnership aims to put in place an even stronger collaboration that will work on the entire value chain of infrastructure projects in Africa. We are looking forward to supporting other SMEs that work with key players in the infrastructure sector,” he said.
GuarantCo chief executive officer Lasitha Perera, said the organisation was delighted to partner with AGF and increase support to SMEs active in the infrastructure sector in Africa.
“This collaboration between two local currency focused guarantors offers the potential for us to engage local financial institutions and investors in financing the entire value chain in an African infrastructure project,” reads the statement.
The transaction will enable AGF and GuarantCo to explore further partnership opportunities of working together in contributing towards economic growth in Africa.