The African Export-Import Bank (Afreximbank) has signed on Thursday, an agreement with the African Guarantee Fund (AGF) for a $30m re-guarantee facility to support African small and medium-sized enterprises (SMEs), in the trade value chain to allow them to access funds for their activities.
On behalf of Afreximbank, Director, Trade Finance, Gwen Mwaba signed the agreement, while Chief Risk Officer of the AGF, Constant Nzi, signed for the fund, during a ceremony held on the sidelines of the recently-concluded Intra-African Trade Fair in Cairo.
The agreement provides the facility to be used to support the financing needs of African SMEs by enhancing their access to long-term financing, thereby acting as a catalyst to enable them to grow, create more jobs, sustain the existing labour force, develop intra-African, and extra-African trade.
The re-guarantee facility aims to provide comfort to financial institutions in lending to SMEs, which tend to be regarded as a risky segment. It enables financial institutions to transform their short-term deposits into long-term financing to SMEs, as well as upholds Afreximbank’s SME support initiative, and the AGF’s strategic plan.
The facility is expected to sustain positive social-economic changes among the over 6,000 SMEs that are expected gain access to guaranteed loans from African local banks, hence contributing towards trade development, economic growth, and poverty reduction.