Ecobank Transnational Incorporated and African Guarantee Fund sign $50 million agreement to support the growth of SMEs in Africa
| By Chinwe Okafor | Oct. 7, 2013 @ 01:00 GMT
IN its bid to support small and medium scale enterprises, SMEs, in the sub-Saharan Africa, Ecobank Transnational Incorporated and the African Guarantee Fund, AGF, on Tuesday, September 24, in Lagos, signed a $50 million guarantee agreement aimed at supporting SMEs in Africa. Patrick Akinwuntan, Ecobank’s group executive director, domestic banking, said the transaction reaffirmed the bank’s commitment to supporting SMEs in the continent and that its collaboration with the AGF would enable the SME sectors play a critical role in the socio-economic development of Africa.
“The SMEs have a significant growth potential and they represent Africa’s rising middle class. They provide the largest employment pool for the nation’s vibrant population and the bank has over time, aided small businesses through exchange of knowledge, advice and exposure to other countries as its branch network allows it to expose SMEs in Nigeria to their peers across Africa,” he said.
Felix Bikpo, chief executive officer of AGF, said that the organisation’s partnership with Ecobank would be of great significance because it would give the AGF, a very important Pan-African banking network through which African SMEs would be assisted in getting increased access to financing. Speaking on the major obstacles to SMEs, Bikpo said that inaccessibility of finance constituted a major obstacle to small business growth and development because only 20 percent of African SMEs receive a credit line from financial institutions.
“This partnership is another manifestation of AGF’s role as the missing link to increasing the finances of African SMEs by banks and non-bank financial institutions. The AGF is putting up its best into promoting the private sector, especially the SMEs. Though there are challenges SMEs face such as access to market, access to funds or finance, lack of infrastructure and ways to get collateral so as to be able to access loans, we in the AGF have decided to partner with financial institutions in Africa to help them overcome these challenges they are facing. The AGF’s mandate is to assist financial institutions scale up their SME financing in Africa through the provision of partial loan guarantees and capacity development assistance,” Bikpo said.
Thierry Tanoh, ecobank’s chief executive officer, said that the agreement reaffirmed Ecobank’s commitment to supporting SME businesses and that their collaboration with AGF would further enable the SME sector to play a critical role in the socio-economic development of Africa.
Ecobank and the AGF, said they would work together under the terms of the $50 million agreement to unlock the potentials of the SMEs in Benin, Burkina Faso, Cameroon, Côte d’Ivoire, the DRC, Kenya and Nigeria, to deliver inclusive growth. Ecobank Transnational International is incorporated in Lomé, Togo, and is the parent company of the leading independent pan-African banking group. It currently has a presence in 34 African countries.