AFRICA – Proparco, has invested US$10 million in the African Guarantee Fund (AGF) to support the Affirmative Finance Action for Women in Africa (AFAWA) initiative launched to increase access to finance for women entrepreneurs.
The AFAWA is a joint initiative of the African Development Bank and the AGF launched in 2016 and supported by France and the G7 member states.
It aims to close the financing gap affecting women in Africa by increasing the volume of loans provided to them (financing component), building the capacity of women entrepreneurs and providing advisory services to the financial institutions that serve them (technical assistance component) and engaging with stakeholders to remove barriers to their success (business environment component).
“Risk-sharing mechanisms are among the most effective tools for meeting the challenge of financing small and medium-sized enterprises,” Grégory Clemente, CEO, Proparco said.
“Proparco is proud to further commit to strengthening them within the framework of the AFAWA initiative, whose ambition to promote women’s entrepreneurship is commensurate with the challenge it represents for the development of the African continent.”
The financing component is implemented in particular by AGF, which offers financial institutions risk-sharing mechanisms to better serve SMEs.
The US$10 million equity investment in AGF, via AFD Group’s FISEA+ facility, will specifically strengthen its capacity to meet the objectives of the AFAWA initiative.
“SMEs in Africa face a range of difficulties that hinder their growth, the main one being access to finance. This financing challenge is heightened when it comes to women-led SMEs, as these SMEs are perceived to be riskier and therefore face prohibitive interest rates,” Jules Ngankam, General Manager, AGF said.
“In addition, due to certain legal frameworks still in place, women sometimes have difficulties in accessing assets that can be used as collateral. Through this capital increase, AGF will further support women’s entrepreneurship by improving the conditions of access to finance and building the capacity of women entrepreneurs.”
As part of this AFAWA initiative, in order to target women entrepreneurs, AGF is committed to following the criteria of the 2X Challenge initiative which aims to increase women’s economic participation in emerging and developing countries.
Launched in 2018 by the G7 Development Finance Institutions (DFIs), this initiative, in which more than 15 DFIs are now participating, has set a new target in 2021 to mobilise US$15 billion by the end of 2022.
More than 14 000 MSMEs should benefit from this investment by AGF Group, thus supporting more than 120 000 direct and indirect jobs.
Proparco is a Development Finance Institution partly owned by the French Development Agency (AFD) and private shareholders.