The African Guarantee Fund (AGF) has set its sights on closing the substantial $300 billion financing gap for small and medium-sized enterprises (SMEs) across Africa.
Jules Ngankam, the Group Chief Executive Officer of AGF, made this announcement during a press briefing ahead of the ninth edition of the Green Finance Conference, scheduled to commence in Lagos on Tuesday.
Ngankam highlighted that the significant SME financing gap in Africa necessitated the development of solutions to narrow it down.
He explained, “The SME financing gap in Africa is estimated to be around $300 billion, and to address this gap, we provide two main products: financial and technical solutions because we believe that the solution is not only financial. We offer financial solutions but also non-financial ones. When we discuss the SME financing gap, it stems from similar gaps.”
Ngankam outlined some of the challenges faced, including the information gap, where many SMEs struggle to furnish financial institutions with the necessary information for proper risk assessment. AGF collaborates with SMEs to enhance their bookkeeping practices and offers technical assistance and capacity building.
He also addressed the collateral gap, where most SMEs cannot provide the required collateral to banks, emphasizing AGF’s role in providing guarantees to replace collateral for SMEs.
Additionally, Ngankam mentioned the tenor gap, which refers to the mismatch between SMEs’ needs and the short-term financing typically provided by financial institutions. AGF works to mobilize long-term funding in the financial market to address this gap.
Furthermore, there’s the risk gap, representing the disparity between perceived and actual risk. AGF aims to bridge this gap by supporting a diverse range of companies, with a focus on SMEs in the green sector and female-owned businesses.
Ngankam highlighted AGF’s partnerships with financial institutions like United Bank for Africa, FCMB, and Access Bank to bridge the financing gap in Nigeria and across the continent.
Honorary Consul of Finland in Lagos, Bankole Oloruntoba, stressed the importance of technical assistance for SMEs to access finance, while former CEO of the Bank of Industry, Kayode Pitan, encouraged SMEs to leverage the financing opportunities provided by AGF through Nigerian banks.
