The African Development Bank Group (AfDB) President, Donald Kaberuka, announced today, at the AfDB Annual General Meetings, the official launch of the African Guarantee Fund (AGF), a market-friendly guarantee scheme designed to ease access to finance for African Small and Medium Enterprises (SMEs). The AGF, designed and funded by the AfDB in partnership with the governments of Denmark and Spain, will provide financial guarantees to financial institutions to stimulate financing to SMEs and unlock their potential to deliver inclusive growth in the region. The AGF is a truly public-private partnership, with other donors, development finance institutions and private investors expected to join to provide additional capital and scale up its operations.
SMEs are the best candidates to achieve inclusive growth in Africa as they contribute significantly to income generation and job creation. However, financial access is consistently reported as one of the major obstacles to SME's growth and development. As a matter of fact, only 20 percent of African SMEs have a line of credit from a financial institution. The AGF will contribute to fill this gap.
Opening the AGF Official Launch session, AfDB President, Donald Kaberuka praised the Danish and Spanish Governments for their continued support to the initiative, especially in times of fiscal austerity, and celebrated a two-year long successful partnership triggered by the Africa Commission's recommendation in 2009 to implement the AGF as one of the initiatives to address youth unemployment in the continent.
"The African Development Bank is strongly committed to promote inclusive private sector-led growth and employment creation across the continent. Accordingly, it always looks at innovative and efficient modes of financing to reach out to SMEs. The AGF will contribute to rationalize the provision of financial guarantees for the purpose of mobilizing financial resources for SMEs. Likewise, the AGF will complement other Bank's products and services for private sector development through SMEs," President Kaberuka noted. He also urged the development community and the private sector to join the AGF and contribute to its success.
During the session, which brought together African and international entrepreneurs, banks, other financial institutions, investment funds, central banks, government agencies, the official AGF logo was unveiled and the AGF's features and expected developmental impact on Africa presented.