By Nkiruka Nnorom
British International Investment (BII), the United Kingdom’s development finance institution and impact investor, and African Guarantee Fund (AGF), a Pan-African guarantee provider, have signed a $75 million re-guarantee agreement for Small and Medium Enterprises (SMEs) across Africa.
BII said in a statement that through the facility, AGF and BII will provide credit guarantees to partner financial institutions for up to 75 per cent of the risk on SME loans, thereby increasing access to credit and reducing collateral requirements for these SMEs. As a result, the eight-year partnership is expected to facilitate up to $150 million in loans to 17,300 SMEs through partner financial institutions.
It also noted that the partnership would also encourage lending to SMEs that are women-owned as well as SMEs that are climate-focused.
Commenting on the partnership, UK Foreign Secretary, James Cleverly said: “British International Investment is already a force for good in Kenya, supporting jobs and livelihoods in Africa.
This investment shows that when we go together, we can go far.”
Constant N’zi, Deputy Group Chief Executive Officer and Group Chief Risk Officer, AGF, said: “Our partnership with British International Investment marks our first engagement with a UK development finance institution and is the beginning of a journey that will positively impact African SMEs. Through this re-guarantee, our capacity to support lending institutions has been increased and we are certain of increased economic growth across the forty African countries wherein our guarantee products are utilized.”
Jo Fry, Investment Director & Head of Intermediated Credit, BII, added: “We are delighted to partner with African Guarantee Fund, a deeply impact-focused African institution, on this critical mission.
This investment will increase access to finance for SMEs across the African continent, with a focus on those in the most challenging contexts.
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