ImpactAlpha, January 22 – The African Development Bank and Danish and Spanish governments launched the African Guarantee Fund more than a decade ago to spur small business finance on the continent with credit guarantees that buffer local lenders. A $50 million guarantee for Guinea-based Vista Group aims to ramp up lending to “green” businesses and companies in Guinea, Burkina Faso, Sierra Leone and Gambia.
The deal, which is supported by the AfDB’s Affirmative Finance Action for Women in Africa guarantee initiative, requires that one-fifth of Vista Group’s loans go to women-led businesses.
AGF supports local and regional lenders in financing small businesses, farmers, female entrepreneurs and other underserved borrowers. Last year, the fund inked a $200 million risk-sharing agreement with Ecobank, one of the more active small business commercial lenders in Africa. It partnered with Gulf African Bank on an Islamic finance-compliant credit risk guarantee to support businesses in Kenya. With Kenya’s Family Bank, African Guarantee Fund is encouraging women’s financial inclusion. It’s eyeing opportunities to use carbon markets to finance clean cooking technologies.