Ecobank Transnational Incorporated and African Guarantee Trust Fund on Tuesday signed a portfolio guarantee agreement to support Small and Medium Scale Enterprises across sub-Saharan Africa.
Following the signing, which took place at the ETI’s head office in Lagos, the two companies said they would promote and support small businesses within the region.
The two institutions said under the terms of the $50m agreement they would work together to unlock the potential of SMEs in Benin, Burkina Faso, Cameroon, Côte d’Ivoire, the Democratic Republic of Congo, Kenya and Nigeria to deliver inclusive growth.
The Group Executive Director, Domestic Bank, ETI, Mr. Patrick Akinwuntan, said the inaccessibility of finance had been a major obstacle to small business growth and development, with only 20 per cent of African SMEs receiving a credit line from a financial institution.
The agreement, he said, aimed to assist viable SMEs by providing an AGF-backed partial guarantee for 50 per cent of net losses of the principal.
This, he added, was under the loan facilities extended to customers in the value chain of the SME financing programmes, including contract and receivable finance, distributorship finance and asset finance.
A statement by the company quoted the Ecobank Group Chief Executive Officer, Thierry Tanoh, as saying, “This agreement reaffirms Ecobank’s commitment to support small and medium-sized businesses and our collaboration with African Guarantee Fund will further enable the SME sector to play a critical role in the socio-economic development of Africa.”
Akinwuntan said, “Ecobank recognises that the SME and medium-sized enterprises sector has significant growth potential, represents Africa’s ‘rising middle’ and provides the largest employment pool for our vibrant population. This agreement leverages our unrivalled pan-African footprint to deepen financial inclusion in Africa.”
The Chief Executive Officer, AGF, Mr. Felix Bikpo, added, “The partnership with Ecobank is of great significance as it provides the African Guarantee Fund with a very important Pan-African banking network through which African SMEs will be assisted in getting increased access to financing. This partnership is another manifestation of AGF’s role as the missing link to increasing the financing of African SMEs by banks and non-bank financial institutions.”
Incorporated in Lomé, Togo, Ecobank Transnational is the parent company of the leading independent pan-African banking group. It currently has a presence in 34 African countries, according to the company.