The African Guarantee Fund (AGF) for small and medium-sized enterprises (SMEs) has entered into a re-guarantee transaction with GuarantCo, a division of Private Infrastructure Development Group (PIDG), to increase its capacity for SME financing.
The transaction will provide a platform for GuarantCo to support AGF and, consequently, partner with financial institutions supporting SMEs in the infrastructure sector.
The deal also facilitates local currency investment into infrastructure.
Through this increased capacity of $74-million, AGF will now be able to guarantee financing beyond its current limit, through risk sharing and risk assessment by the respective organisations.
Since inception, AGF has led the guarantee market in Africa by issuing financial guarantees to the tune of $690-million. This has enabled its partner financial institutions to issue loans estimated at $729-million to African SMEs.
Commenting on this partnership, AGF CEO Felix Bikpo stated, “AGF is glad to be joined by GuarantCo in providing the missing link for financial institutions to execute SME financing strategies effectively and bridging the infrastructure financing gap.
“This partnership will expand our capacity to enhance SME financing and mitigate risk to catalyse private sector development on the continent.”
GuarantCo CEO Lasitha Perera added that the collaboration between local currency-focussed guarantors offers the potential to engage local financial institutions and investors in financing the entire value chain in an African infrastructure project.
The transaction will enable AGF and GuarantCo to explore further partnership opportunities of working together in contributing towards economic growth in Africa