Africa Guarantee Fund receives $2.5m USAID fund to boost SME operation in West Africa

Africa Guarantee Fund(AGF), a non-bank financial institution has received $2.5 million investment grant from USAID-funded West Africa Trade & Investment Hub to support high-potential SMEs in the region alongside the companies that finance them as many still struggle as a result of COVID-19 challenges.

According to a press release available to journalists, the recently received fund in addition to $20 million of private equity will be used to support its two-part COVID-19 Guarantee Facility.

The combined $22.5 million co-investment will expectedly allow AGF to absorb additional pandemic-related risks and provide guarantees to its partner financial institutions (PFIs) on more favourable terms and conditions while remaining financially sustainable.

Jules Ngankam, AGF’s Group Chief Executive Officer said that the Guarantee Facility is a response to the COVID-19 challenge, whilst expressing excitement to partner with the Trade Hub to increase its capacity in bridging the SME financing gap through innovative initiatives.

He said, “Despite the internationally recognized importance of SMEs, African small businesses often have difficulties accessing financing for growth and innovation from the formal financial sector. Over the past two years, SME financing challenges have further escalated due to economic uncertainties brought about by the impact of the pandemic.”

Inferring from partnerships, Robin Wheeler, the Trade Hub’s Chief of Party added that similar collaborations in the past yielded positive results.

He said, “Similar partnerships with Cordaid Investment Management and CrossBoundary, launched in 2021, are already showing success in bringing together the partners, capital, and resources that create a more stable environment for SMEs to grow and make a positive impact in the region. We are excited to add AGF as a co-investment partner.”