Ecobank and African Guarantee Fund Forge USD 200 Million Transformative Risk Sharing Pact

In a significant stride towards bolstering African entrepreneurship and economic growth, Ecobank, a leading pan-African banking group, and the African Guarantee Fund (AGF), a specialized pan-African guarantee provider, have inked a monumental USD 200 million risk-sharing agreement.

 

This transformative alliance, signed on the sidelines of the Africa Financial Industry Summit (AFIS) in Lomé, Togo, seeks to catalyze entrepreneurial ventures and support SMEs, notably those led by women, across 27 African markets where Ecobank operates.

 

The collaboration between Ecobank and AGF marks the third renewal of their partnership, with the initial guarantee in 2013 covering seven countries and a guaranteed portfolio of USD 50 million. Since then, this partnership has expanded, encompassing 14 countries and resulting in cumulative disbursements of USD 230 million by 2018.

 

This recent renewal extends the partnership’s reach to 27 countries within Ecobank’s African network, offering 50% coverage for qualifying SMEs across all target markets.

 

Notable highlights of the partnership include:

1. Empowering Women and Green Transactions: Offering enhanced 75% guarantee cover for Gender Financing and Green Transactions, the agreement aims to expedite transactions in these areas by incorporating reduced pricing.
2. Increased Lending Capacity: The USD 200 million facility will significantly augment Ecobank’s lending capacity to SMEs, enabling the Bank to extend more credit facilities to SMEs striving to expand, innovate, and create job opportunities.
3. Risk Mitigation: AGF will play a pivotal role in mitigating credit risks associated with lending to SMEs, creating a conducive environment for financial institutions to support these businesses without compromising their risk profiles.
4. Financial Inclusion: Aligning with broader financial inclusion objectives, the partnership ensures that diverse businesses, even those in underserved and remote areas, gain access to financial resources essential for growth.
5. Economic Impact: Envisaged to stimulate economic activity and job creation, the USD 200 million risk-sharing agreement is anticipated to generate sustainable development across sub-Saharan Africa.

Jeremy Awori, Ecobank Group CEO, expressed enthusiasm about the partnership’s potential impact on SMEs and the broader economic landscape. He emphasized their commitment to supporting SMEs with affordable financing, particularly in gender and green financing.

 

Jules Ngankam, African Guarantee Fund Group CEO, underscored the significance of risk-sharing mechanisms in driving SME growth and recognized the partnership’s potential to catalyze close to $1 billion in financing for SMEs across African economies.

 

The USD 200 million risk-sharing agreement spans a diverse range of countries across Africa, listed in alphabetical order, from Benin to Zimbabwe. Positioned as a landmark initiative, it demonstrates collaborative efforts to stimulate economic growth and nurture entrepreneurship in the region.