International Finance

Financial guarantees strengthen African SMEs in infrastructure sector

SMEs, Africa, African Guarantee Fund for Small and Medium-Sized Enterprises, AGF, GaurantCo, infrastructure sector, credit guarantee, financial guarantee
The collaboration between the African Guarantee Fund and GuarantCo encourages financial institutions to support infrastructure projects

SMEs functioning in Africa’s infrastructure industry are soon going to enjoy benefits from a US$74mn re-guarantee facility established between the African Guarantee Fund for Small and Medium-Sized Enterprises (AGF) and GaurantCo.

The two establishments are providers of local currency guarantees. GuarantCo’s CEO  Lasitha Perera, said: “This collaboration between two local currency focussed guarantors offers the potential for us to engage local financial institutions and investors in financing the entire value chain in an African infrastructure project.”

AGF is focused on assisting financial institutions to enhance their financing capabilities to African SMEs and GuarantCo aims to develop infrastructure in low-income countries along with full-fledged support for private-sponsored infrastructure projects to raise debt finance through credit guarantee provision.

AGF’s CEO Felix Bikpo, said: “This partnership aims to put in place an even stronger collaboration that will work on the entire value chain of infrastructure projects in Africa. We are looking forward to supporting other SMEs that work with key players in the infrastructure sector.”

In the last six years, AGF has issued financial guarantees in Africa encouraging its partner financial institutions to issue loans worth of US$729mn to about 7,600 African SMEs, reported Global Trade Review.

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