Summary
- The AGF Covid-19 Guarantee facility will allow SMEs to pay less over a given period than what they had been paying and therefore cope better in the face of the Covid-19.
- The AGF, however, did not reveal the amount set aside for guaranteeing the SMEs nor did it give any criteria to be used in determining which entities qualify.
The African Guarantee Fund (AGF), a non-bank financial
institution jointly owned by the Danish and Spanish governments as well
as the African Development Bank (AfDB), is to guarantee small and medium
enterprises (SMEs) to have their loans with commercial banks
restructured.
The AGF Covid-19 Guarantee facility will
allow SMEs to pay less over a given period than what they had been
paying and therefore cope better in the face of the Covid-19.
“African
Guarantee Fund for Small and Medium-sized Enterprises (AGF) has
announced its Covid-19 response aimed at reducing the uncertainties
facing financial institutions in Africa as a result of the global
coronavirus pandemic.
“AGF’s Covid-19 response is built
on the imperative need for commercial solutions over and above the
regulatory efforts already provided by the various central banks and
governments in the continent,” said the AGF in a statement.
“The
African Guarantee Fund’s response sets the platform for economic
stabilisation, followed by an economic revival through AGF’s newly
developed Covid-19 Guarantee Facility that will, firstly, provide more
comfort to financial institutions to restructure facilities that become
non-performing because of Covid-19 and, secondly, provide commercial
stimulus to the financial sector with the aim of mitigating the
deterioration of SMEs’ perceived risk.”
The AGF, however, did not reveal the amount set aside for
guaranteeing the SMEs nor did it give any criteria to be used in
determining which entities qualify.
Kenyan banks have
been restructuring loans held by their clients in recent months, but so
far the amount whose terms have been so changed is still less than Sh200
billion out of an industry loan portfolio of over Sh2 trillion.
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