The African Export-Import Bank (Afreximbank) has signed an agreement with the African Guarantee Fund (AGF) for a 30 million dollar re-guarantee facility to support African Small and Medium Enterprises (SMEs).
The Director, Trade Finance of Afreximbank, Mr Gwen Mwaba, in a statement on Thursday said the facility would help the SMEs in the trade value chain to access funds for their activities.
The News Agency of Nigeria (NAN) reports that the agreement provides for the facility to be used to support the financing needs of African SMEs.
This is aimed at enhancing their access to long term financing, thereby acting as a catalyst to enable them to grow, create more jobs, sustain the existing labour force and develop intra-African and extra-African trade.
According to Mwaba, the re-guarantee facility is aimed at providing comfort to financial institutions in lending to SMEs, which tend to be regarded as a risky segment.
He said that it would enable the financial institutions to transform their short term deposits into long term financing to SMEs.
He said that it would also support Afreximbank’s SME support initiative and AGF strategic plan.
“The facility is expected to support positive social-economic changes among the more than 6,000 SMEs that are expected to gain access to guaranteed loans from African local banks.
“It will thereby contribute to trade development, economic growth and poverty reduction in the continent,” Mwaba said.