The African Guarantee Fund (AGF), a Kenya-based organization that aims to increase financial access by underwriting commercial bank lending to small and medium-sized enterprises (SMEs) in Africa, recently reached an agreement with Commercial Bank of Africa (CBA), a bank based in Kenya, for a KES 200 million (USD 2.3 million) guarantee and with Kenya-based bank Investments & Mortgages Limited (I&M Bank) for a guarantee of KES 100 million (USD 1.2 million) to support the banks’ on-lending to SMEs. CBA and I&M Bank each operate in Kenya and Tanzania; I&M also serves Rwanda and Mauritius.
Jeremy Ngunze, the chief executive of CBA, reportedly said, “We are aware of the struggles that many entrepreneurs in the SME sector face in raising capital for their businesses… It is as a result of the inadequate access to finance that CBA is happy to be associated with AGF.”
The African Guarantee Fund (AGF) was established in Kenya in June 2012 with initial capital sufficient to issue partial guarantees of loans totaling USD 50 million. AGF has branches in 9 African countries as of March 2013.
As of December 2012, I&M Bank reported total assets of KES 92 billion (USD 1.1 billion). CBA reported total assets of KES 75 billion (USD 880 million) as of December 2010.
By Nicole Boyd, Research Associate
About African Guarantee Fund (AGF)
The African Guarantee Fund (AGF) was established in Kenya in June 2012 with initial capital sufficient to guarantee loans of USD 50 million. Its goal is to increase financial access for small- and medium-sized enterprises (SMEs) in Africa. It provides partial financial guarantees to support loans, equity capital financing, and funds mobilization to client SMEs and capacity development support for SME financing. AGF is headquartered in Mauritius, but its operations are managed out of its Kenya office. It also has branches in 8 other African countries as of March 2013.
Sources and Additional Resources:
Ventures Africa. “African Guarantee Fund Increases SME Guarantee Loan In Kenya,” http://www.ventures-africa.com/2013/03/african-guarantee-fund-increases-sme-guarantee-loan-in-kenya/
Business Daily. “I&M signs deal to extend its loan reach,” http://www.businessdailyafrica.com/I-M-signs-deal-to-extend-its-loan-reach/-/539552/1726106/-/51hs5qz/-/index.html
MicroCapital. October 22, 2012, “MICROCAPITAL BRIEF: Small and Micro Enterprise Programme (SMEP) Deposit Taking Microfinance Institution of Kenya Looking to Raise $18.5m in Share Capital,” https://www.microcapital.org/microcapital-brief-small-and-micro-enterprise-programme-smep-deposit-taking-microfinance-institution-of-kenya-looking-to-raise-18-5m-in-share-capital/
MicroCapital. November 2, 2010, “MICROCAPITAL BRIEF: African Development Bank (AfDB), Governments of Denmark and Spain to Create African Guarantee Fund (AGF) to Bring Economic Resources to African Businesses Including Microfinance Institutions (MFIs),” https://www.microcapital.org/microcapital-brief-african-development-bank-afdb-governments-of-denmark-and-spain-to-create-african-guarantee-fund-agf-to-bring-economic-resources-to-african-businesses-including-microfinance-in/
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