Ecobank has joined forces with leading international finance and development organisations to help fill the gap in financing for small and medium-sized enterprises (SMEs) in some of Sub-Saharan Africa’s poorest and most fragile countries.
Ecobank Transnational Incorporated (ETI), parent company of pan-African banking group Ecobank, on Tuesday signed a landmark risk-sharing agreement with the International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets, and the European Investment Bank (EIB), the long-term lending arm of the European Union.
Under the agreement, the EIB, which is already a key partner in the IFC’s Global SME Finance Facility, will join the IFC’s existing risk-sharing facility with ETI. The EIB and the IFC will share 25 percent of the risk in the $110-million facility, alongside ETI.
The facility is designed to overcome the challenges of lending to smaller businesses with a higher risk profile.
The new risk-sharing agreement will see the organisations collaborate in countries where more than 50 percent of the population live in poverty, unemployment is high and infrastructure is poor, all of which exacerbates the operating conditions for smaller businesses. Countries to be targeted include Burundi, Chad, Côte d’Ivoire, Democratic Republic of the Congo, Guinea, Mali and Togo.
Speaking on the sidelines of 2016 Africa CEO Forum in Abidjan, Côte d’Ivoire, on Tuesday, the IFC’s director for Western and Central Africa, Vera Songwe, said partnerships like the one between the IFC, the EIB and ETI were “critical to helping these SMEs and economies to grow and create jobs”.
Ambroise Fayolle, EIB VP said: “As the EU bank, the European Investment Bank is strongly committed to supporting private sector investment in Africa.
The EIB contributed $100-million to the Global SME Finance Facility in 2014, with the particular objective of targeting SMEs in Africa.
“Every year, the European Investment Bank invests €2.5-billion in Africa to enhance access to finance for SMEs and micro-enterprises, to develop social and much-needed economic infrastructure and to promote climate action,” Fayolle added.
The Global SME Finance Facility is a blended finance vehicle that integrates investment and advisory services to help banks reach more SMEs. The facility mobilises funding from donors, international finance institutions and the private sector to help banks de-risk and scale up SME lending.
The facility targets SMEs that don’t have access to finance, including women-owned SMEs, agriculture and climate-related businesses and those in fragile States. It has already committed to 92 projects in 27 countries. By the end of December 2015, the facility had made more than 100 000 SME loans, worth a total of $6.4-billion.
Ade Ayeyemi, chief executive of Ecobank Group, which has a presence in 36 African countries, said Tuesday’s agreement with EIB and IFC “buttresses our continued commitment at Ecobank to supporting small and medium scale enterprises in Africa”.
He added: “Their financing and growth is an important part of the development of the private sector in Africa and the overall growth of our economies.”
Edited by: African News Agency
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