USAID Offers $22.5m to West Africa-Based SMEs
By Aduragbemi Omiyale
Small and medium enterprises (SMEs) operating in West Africa will have $22.5 million to support their businesses courtesy of the United States Agency for International Development (USAID).
The fund comprises a $2.5 million co-investment grant given to the African Guarantee Fund for Small and Medium-sized Enterprises (AGF) and $20 million of private equity to support the two-part COVID-19 Guarantee Facility of the leading non-bank financial institution.
The capital is aimed to solve the problem faced by small business owners in the region and also a part of efforts to support high-potential SMEs.
It was learned that the combined $22.5 million co-investment will allow AGF to absorb additional pandemic-related risk and provide guarantees to its partner financial institutions (PFIs) on more favourable terms and conditions while remaining financially sustainable.
Through the COVID-19 Guarantee Facility, AGF expects to issue loan guarantees to 30 partner financial institutions (PFIs), allowing them to unlock up to $160 million in financing for approximately 3,000 West Africa-based SMEs impacted by the pandemic.
In addition, it will provide technical assistance to the PFIs and SMEs benefiting from the COVID-19 Guarantee Facility to accelerate their post-pandemic recovery.
During AGF’s three-year partnership with the Trade Hub, the COVID-19 Guarantee Facility is expected to help SMEs create 15,000 new jobs, maintain 20,000 existing jobs, and collectively generate $100 million in sales and $8 million in exports.
“Despite the internationally recognized importance of SMEs, African small businesses often have difficulties accessing financing for growth and innovation from the formal financial sector.
“Over the past two years, SME financing challenges have further escalated due to economic uncertainties brought about by the impact of the pandemic,” said Jules Ngankam, AGF’s Group Chief Executive Officer.
“Our COVID-19 Guarantee Facility is a response to this challenge, and we are excited to partner with the Trade Hub to increase our capacity in bridging the SME financing gap through this innovative initiative,” he added.
The Trade Hub’s partnerships with AGF represent its forward-thinking approach to helping high-potential West Africa-based businesses with the financing needed to rebound from the COVID-19 pandemic.
“Similar partnerships with Cordaid Investment Management and CrossBoundary, launched in 2021, are already showing success in bringing together the partners, capital, and resources that create a more stable environment for SMEs to grow and make a positive impact in the region,” says Robin Wheeler, the Trade Hub’s Chief of Party. “We are excited to add AGF as a co-investment partner,” he added.