Business
Ecobank, AGF Sign a Transformative $200m Risk Sharing Agreement
Ecobank, AGF Sign a Transformative $200m Risk Sharing Agreement
Ecobank and the African Guarantee Fund (AGF) yesterday joined forces in a groundbreaking $200 million risk-sharing agreement aimed at catalyzing economic growth and supporting entrepreneurial ventures, including women-owned enterprises (SMEs) on the continent.
The two organizations signed a strategic partnership agreement yesterday on the sidelines of the Africa Financial Industry Summit (AFIS) in Togo, in the presence of their respective leaders.
The $200 million risk-sharing agreement marks the third renewal of Ecobank’s partnership with AGF. The initial guarantee, provided by AGF in 2013, covered seven countries with a total guaranteed portfolio of $50 million.
Commenting on the partnership, Ecobank Group CEO Mr. Jeremy Awori expressed enthusiasm in a statement about the potential impact on SMEs and the overall economic landscape, stating, “Our enhanced partnership with the African Guarantee Fund marks a significant step forward in our commitment to supporting SMEs across Africa with affordable financing. Through this partnership, we are taking bold steps to enhance green financing and gender financing. In doing so, we aim to eliminate the rigorous and restrictive requirements for collateral, particularly hindering women-focused businesses’ access to credit.”
Also, the CEO of African Guarantee Fund Group, Jules Ngankam, acknowledged the longstanding partnership between AGF and Ecobank Group and its transformative impact on the SME landscape: “The renewal of our partnership with Ecobank Group to now span 27 countries is proof of the importance of risk-sharing mechanisms that banks should leverage to grow their SME portfolio. This partnership will catalyze close to $1 billion of financing for SMEs, who are the real drivers of growth in African economies.”
“Ecobank’s “Ellevate” program will also largely benefit from our “AFAWA Guarantee for Growth” facility to significantly boost financing of women-led or owned SMEs,” he added.
In 2018, the scope of the guarantee expanded to encompass 14 countries, resulting in cumulative disbursements of $230 million since that time. The renewed partnership now extends to 27 countries within Ecobank’s African network, offering 50 percent coverage for qualifying SMEs across all target markets.
By leveraging Ecobank’s extensive network and financial expertise and merging it with AGF’s proven track record in risk mitigation, the collaboration aims to address the challenges faced by SMEs in accessing affordable financing.
Key highlights of the partnership include: enhanced 75 percent guarantee cover for gender financing and green transactions; favorable terms have been set to ensure more woman-led and green transactions are fast-tracked, incorporating reduced pricing.
Increased Lending Capacity: The $200 million facility allows Ecobank to significantly boost its lending capacity to SMEs, enabling the bank to extend more credit facilities to SMEs seeking to expand, innovate, and contribute to job creation.
Risk Mitigation: AGF will play a pivotal role in mitigating the credit risk associated with lending to SMEs, fostering a more conducive environment for financial institutions to support these businesses without compromising their risk profiles.
Financial Inclusion: By channeling funds towards SMEs, the collaboration aligns with broader financial inclusion objectives, ensuring that a diverse range of businesses, including those in underserved and remote areas, can access the financial resources needed for growth.
The $200 million risk-sharing agreement is expected to have a ripple effect on various sectors, contributing to increased economic activity, job creation, and sustainable development across sub-Saharan Africa.
The risk-sharing agreement is positioned to become a landmark initiative in the financial landscape of Sub-Saharan Africa, demonstrating the collaborative efforts of key players in driving economic growth and fostering entrepreneurship. Countries covered in the partnership, listed in alphabetical order, are: Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, the Central African Republic, Chad, Congo, Côte d’Ivoire, the Democratic Republic of the Congo, Equatorial Guinea, Gabon, Ghana, Guinea-Bissau, Guinea-Conakry, Kenya, Mozambique, Nigeria, Rwanda, Senegal, Sierra Leone, South Sudan, Tanzania, Togo, Uganda, Zambia, and Zimbabwe.
