> *ARUSHA:*
>
> The African Guarantee Fund (AGF) will provide guarantees for loans taken
> by SME’s in commercial banks, effectively providing the much needed
> breakthrough for the small entrepreneurs in the continent to grow at a
> faster pace.
>
> Addressing the media during the launch in Arusha, Tanzania, Chief
> Executive Officer Felix Bikpo said AGF will work with commercial banks in
> nine countries in the continent in its first phase, before moving to cover
> the entire continent in subsequent phases of its rollout.
>
> “We are already working with banks in Kenya, Uganda, Tanzania, Ghana,
> Senegal, Cameroon, Mozambique, Zambia and Mali, with a view to accelerating
> economic development in the respective countries by making it easier for
> SME’s with strong credentials to access credit”, he explained.
>
> Bikpo added that AGF has been established out of the global recognition
> that the SME’s have been identified as some of the key drivers for economic
> growth noting that there is currently a funding gap of between $80-$100
> billion, affecting 40-59% of formal SMEs, and an even greater share of
> informal SMEs.
>
>
>
> “According to the World Bank’s Enterprise Survey, SMEs make up
> approximately 81% of Africa’s private sector firms, with 51% being
> small-scale and 31% being medium-sized. SMEs contributed over 50% of new
> jobs in Sub Saharan Africa in 2009 however only approximately 20% to GDP
> (this is compared to 40-60% of GDP in the EU and the US and even higher
> rates in growing Asian economies). We can see that there is a huge
> unexploited capacity for growth”, he explained.
>
> AGF has started operations with an initial $50 million share capital
> invested by the African Development Bank, the government of Spain through
> the Spanish Agency for International development Cooperation (AECID) and
> the government of Denmark through the Danish International Development
> Agency (DANIDA).
>
> Bikpo explained that the AGF is planning to grow to its share capital to
> $500 by 2016, as it seeks to grow beyond the nine countries that have been
> earmarked for the first phase of the exercise.
>
> The Fund will also pioneer in capacity development initiatives for SME’s with
> the intention to contribute to an improvement of SMEs financings know-how
> in the financial sector.
>
> The CEO noted, “Improving SME management and finance capacity are also
> critical to the success of the guarantee scheme and this will overall
> increase SMEs lending. Capacity building can also serve to lower the costs
> of utilizing the guarantee and/or support the development of new SME’s
> products”.
>
> The event was attended by African Development Banks President Dr. Donald
> Kaberuka, Jose Maria Fernandez Lopez- Turiso of the Spanish International
> Development Agency (AECID) and Mette Knudsen, the Head of Department in
> charge of Africa at the Danish Development Agency (DANIDA). The three
> commended AGF on its launch and pledged to continue supporting initiatives
> aimed at helping grow regional economies.
>
> The fund will be headquartered in Nairobi, Kenya with regional offices
> covering each of the countries that it will operate in.
>
> *Ends…/*
>
> *For further enquiries please contact: *
>
> * *
>
> *Nick Thiongo, Ogilvy Public Relations *
>
> *Email: nick.thiongo@ogilvy.co.ke *
>
> *Cell phone: +254-723-988944*
>
> * *
>
> *or Henry Ndirangu, Ogilvy Public Relations *
>
> *Email: henry.ndirangu@ogilvy.co.ke *
>
> *Cell Phone: +254-20-2717750***
>
>