SMEs in Africa’s infrastructure sector are to benefit from African Guarantee Fund’s increased capacity through GuarantCo’s re-guarantee facility of about $74 million.
The African Guarantee Fund (AGF) said Friday that it had entered into a re- guarantee transaction of an amount of up to $74 million with GuarantCo, an arm of Private Infrastructure Development Group (PIDG) to increase its guarantee capacity for SME financing on the continent.
The AGF said with the increased capacity, it would be able to support larger local currency transactions for SMEs involved in infrastructure.
“AGF is glad to be joined by GuarantCo in bridging the infrastructure financing gap. This partnership aims to put in place an even stronger collaboration that will work on the entire value chain of infrastructure projects in Africa. We are looking forward to supporting other SMEs that work with key players in the infrastructure sector,” said Felix BIKPO, AGF’s chief executive officer while commenting on the GuarantCo AGF partnership
On the other hand, Lasitha Perera, GuarantCo’s chief executive officer said: “We are delighted to be able to partner with the African Guarantee Fund and increase support to SMEs active in the infrastructure sector in Africa. This collaboration between two local currency focussed guarantors offers the potential for us to engage local financial institutions and investors in financing the entire value chain in an African infrastructure project.”
The transaction will enable AGF and GuarantCo to explore further partnership opportunities of working together in contributing towards economic growth in Africa.
Over the past 6 years, AGF has led the guaranteed market in Africa by issuing financial guarantees to a tune of $690 million. This has enabled its partner financial institutions to issue loans estimated at $729 million to about 7600 African SMEs.
“SME’s have a large and growing impact on GDP in emerging markets and are a key source of job creation. Strengthening Africa’s infrastructure is critical for development as it is through this that African countries become more competitive at a global level,” the AGF said in a statement
GuarantCo as a global guarantee fund has issued over $900 million of guarantees since inception in 2005 with a mandate to enable local currency finance for infrastructure.