Proparco’s $10 million investment in the African Guarantee Fund will contribute to the growth of this pan-African fund and support the AFAWA initiative launched to increase access to finance for women entrepreneurs.
The Affirmative Finance Action for Women in Africa (AFAWA) is a joint initiative of the African Development Bank and the African Guarantee Fund (AGF), launched in 2016 and supported by France and the G7 member states. It aims to close the financing gap affecting women in Africa by increasing the volume of loans provided to them (“financing component”), building the capacity of women entrepreneurs and providing advisory services to the financial institutions that serve them (“technical assistance component”) and engaging with stakeholders to remove barriers to their success (“business environment component”).
The financing component is implemented in particular by AGF, which offers financial institutions risk-sharing mechanisms to better serve SMEs. The $10 million equity investment in AGF, via AFD Group’s FISEA+ facility, will specifically strengthen its capacity to meet the objectives of the AFAWA initiative.
As part of this AFAWA initiative, in order to target women entrepreneurs, AGF is committed to following the criteria of the 2X Challenge initiative which aims to increase women’s economic participation in emerging and developing countries. Launched in 2018 by the G7 Development Finance Institutions (DFIs), this initiative, in which more than 15 DFIs are now participating, has set a new target in 2021 to mobilise $15 billion by the end of 2022.
More than 14 000 MSMEs should benefit from this investment by AGF Group, thus supporting more than 120 000 direct and indirect jobs.
AFD Group’s commitment to supporting MSMEs, particularly those run by women
The launch of the French initiative Choose Africa has enabled AFD Group to step up its support for the growth of African start-ups and MSMEs. Since 2018, more than 3 billion euros have been committed to the benefit of over 26 000 MSMEs in Africa. Building on this success, AFD Group will continue its efforts in the coming years by continuing to adapt its tools to the needs of entrepreneurs. The FISEA+ facility launched in 2021 is part of this approach, specifically targeting fragile countries, social and solidarity-oriented enterprises and SMEs that provide essential goods and services through digital innovation.
With the Choose Africa initiative, France is catalyzing the European commitment to African entrepreneurship. This commitment was reflected in 2020 by an increased mobilisation of European DFIs to support MSMEs affected by the crisis. Supporting African entrepreneurship is now one of the priorities of the partnership between Europe and Africa.
“Risk-sharing mechanisms are among the most effective tools for meeting the challenge of financing small and medium-sized enterprises. Proparco is proud to further commit to strengthening them within the framework of the AFAWA initiative, whose ambition to promote women’s entrepreneurship is commensurate with the challenge it represents for the development of the African continent,” said Grégory Clemente, CEO of Proparco.
“SMEs in Africa face a range of difficulties that hinder their growth, the main one being access to finance. This financing challenge is heightened when it comes to women-led SMEs, as these SMEs are perceived to be riskier and therefore face prohibitive interest rates. In addition, due to certain legal frameworks still in place, women sometimes have difficulties in accessing assets that can be used as collateral. Through this capital increase, AGF will further support women’s entrepreneurship by improving the conditions of access to finance and building the capacity of women entrepreneurs,” said Jules Ngankam, AGF’s General Manager.