AfDB to give women SMEs Sh218bn loans

By VICTOR JUMA
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Summary

• The African Development Bank (AfDB) has launched a credit facility of up to $2 billion (Sh218 billion) aimed at funding women-owned small and medium enterprises in multiple African countries including Kenya.
• The institution will work with African Guarantee Fund (AGF) –which offers partial insurance for loans to SMEs— to disburse the loans through banks in the programme dubbed Affirmative Finance Action for Women in Africa (AFAWA).
• Banks in Cameroon, Democratic Republic of Congo, Kenya, Rwanda, Tanzania and Uganda are signing on to the programme.

The African Development Bank (AfDB) has launched a credit facility of up to $2 billion (Sh218 billion) aimed at funding women-owned small and medium enterprises in multiple African countries including Kenya.

The institution will work with African Guarantee Fund (AGF) –which offers partial insurance for loans to SMEs— to disburse the loans through banks in the programme dubbed Affirmative Finance Action for Women in Africa (AFAWA).

Banks in Cameroon, Democratic Republic of Congo, Kenya, Rwanda, Tanzania and Uganda are signing on to the programme.

“As the implementing partner of AFAWA’s Guarantee for Growth programme, we are already observing an increased appetite from banks for this innovative product that seeks to support women entrepreneurs,” Jules Ngankam, African Guarantee Fund’s Group CEO said in a statement.

“We have recently signed agreements with leading banks on the continent who are keen to increase their women SMEs portfolio.”

The initiative is expected to reach an average of 18,000 women small and medium enterprises and create 80,000 direct jobs.

It is estimated that African women face a $42 billion (Sh4.6 trillion) financing gap. This is due to lack of access to collateral in the form of land and property.

as well as to knowledge, mentorship, and networks to grow their businesses, which are typically in the informal sector.

Guarantee for Growth, which receives support from the Group of Seven (G7) countries as well as the Netherlands and Sweden, has three pillars: boosting access to finance, providing technical assistance to financial institutions and women business owners; and improving the enabling environment for women’s SMEs.

The programme will build on AGF’s existing business in Kenya and other markets. Some of the local lenders that have struck loan guarantee deals with AGF include NCBA and Ecobank.

AGF typically guarantees half of the value of a loan balance to a single SME borrower or half the value of an outstanding SME loan portfolio and charges banks a fee of between 1.5 percent to three percent for the risk guarantee.