Ecobank,AGF forge $200m partnership to boost Africa’s SME economy

Onome Amuge

Ecobank, the largest pan-African banking group, and the African Guarantee Fund (AGF), a leading provider of credit guarantees in Africa, have announced a groundbreaking $200 million risk-sharing agreement.

The partnership aims to spur economic growth and support entrepreneurship on the continent, including women-owned small and medium enterprises (SMEs). The agreement was signed by the two organisations recently at the Africa Financial Industry Summit (AFIS) in Lomé, Togo, with senior representatives of both organisations in attendance.

The $200 million risk-sharing agreement represents the third renewal of Ecobank and AGF’s partnership. The two organisations first partnered in 2013, when AGF provided a $50 million guarantee covering seven countries in Ecobank’s network. In 2018, the guarantee was expanded to cover 14 countries, and since then, AGF has disbursed a cumulative $230 million to support the growth of SMEs in these markets. The latest renewal is the largest yet, extending the coverage to 27 countries within Ecobank’s network and offering 50 per cent risk coverage for qualifying SMEs.

The partnership between Ecobank and AGF is designed to address the challenges faced by SMEs in accessing affordable financing. Through the collaboration, Ecobank will leverage its wide network and financial expertise, while AGF will provide its risk mitigation expertise. This will result in a number of benefits for SMEs, including:

– Enhanced guarantee cover: The new partnership offers a 75% guarantee cover for gender financing and green transactions, with reduced pricing to incentivize such transactions.

– Increased lending capacity: The $200 million facility allows Ecobank to significantly increase its lending capacity to SMEs, enabling more businesses to access the capital

– Risk mitigation: AGF’s expertise in risk mitigation will play a vital role in reducing the risk associated with lending to SMEs, creating a more conducive environment for financial institutions to support these businesses without jeopardizing their own risk profiles. This will facilitate the flow of capital to a sector that has traditionally been underserved by financial institutions.

– Financial inclusion: The partnership will help to expand financial inclusion in Africa, providing more people with access to the banking system and enabling them to participate in the formal economy.

-Economic impact: The increased lending capacity is expected to have a ripple effect on various sectors, leading to increased economic activity and job creation across sub-Saharan Africa.

Jeremy Awori, group CEO of Ecobank, expressed excitement about the partnership’s potential impact on SMEs and the overall economic landscape. He said, “This enhanced partnership with the African Guarantee Fund represents a major step forward in our commitment to providing affordable financing to SMEs across Africa. Through this partnership, we are taking bold action to increase the availability of green and gender-focused financing. By doing so, we hope to overcome the barriers that prevent many women-owned businesses from accessing credit. This is a game-changing initiative, and we are proud to be a part of it.”

On his part, Jules Ngankam, group CEO of the African Guarantee Fund, acknowledged the long-standing partnership between AGF and Ecobank Group, and its transformative impact on the SME landscape. Ngankam noted that the partnership renewal with Ecobank Group, to now span 27 countries, demonstrates the importance of risk-sharing mechanisms in growing banks’ SME portfolios. This partnership, he said, will unlock close to $1 billion in financing for SMEs, which are the true engines of economic growth in Africa.

“Ecobank’s “Ellevate” programme will also largely benefit from our “AFAWA Guarantee for Growth” facility to significantly boost financing of women led or owned SMEs,” he added.

The $200 million risk-sharing agreement is set to become a landmark initiative in Sub-Saharan Africa’s financial landscape, showcasing the power of collaboration in driving economic growth and supporting entrepreneurship. The agreement covers 27 countries: 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.