Ecobank, AGF sign $200m deal to fund SMEs

A $D200 million risk-sharing deal has been signed by the African Guarantee Fund, a specialized pan-African guarantee provider, and Ecobank, the largest pan-African banking group.

The cooperation aims to assist entrepreneurial endeavors, particularly women-owned SMEs on the continent, and to catalyze economic growth.

In the presence of their respective leaders, the two organizations signed a strategic collaboration agreement on Thursday during the Africa Financial Industry Summit in Lomé, Togo.

The guarantee's scope was extended to include 14 nations in 2018, and $230 million has been disbursed cumulatively since then. Within Ecobank's African network, the extended cooperation currently covers 27 countries, providing 50% coverage for eligible SMEs in all target markets.

The partnership intends to solve the difficulties SMEs encounter in obtaining inexpensive financing by combining AGF's demonstrated track record in risk mitigation with Ecobank's broad network and financial knowledge.

By creating a more favorable atmosphere, the fund will enable financial institutions to help these companies without jeopardizing their risk profiles.

‘’By channeling 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 partnership's participating countries are listed alphabetically below: 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. The $200 million risk-sharing agreement is expected to become a significant undertaking in Sub-Saharan Africa's financial landscape, showcasing the cooperative efforts of major players in promoting economic growth and encouraging entrepreneurship.