Supporting the private sector constitutes one of the key priorities for AFD and Proparco, its private sector financing subsidiary company. They have developed a broad range of financial products in order to effectively promote investment in this sector. Products have been tailored to the needs of enterprises, whatever their size: equity capital financing, long-term loans, credit lines, guarantee mechanisms, investment capital.
Risk-sharing tool Facilitation Access to Bank Credit – ARIZ
ARIZ is a guarantee mechanism designed to give small and medium enterprises (SMEs) and Microfinance institutions (MFIs) better access to financing. ARIZ aims to be a lever for economic growth thanks to partnerships built with banks, financial institutions and private equity investment entities in developing countries. It supports business start-ups and development projects by scaling up banks’ participation in their financing. ARIZ is one of the main mechanisms for France’s Initiative for Growth and Employment in Africa launched by the French President in Cape Town, South Africa, on 29 February 2008. The Initiative aims to support economic growth and job-creating start-ups. ARIZ’s intervention capacities have been scaled up and its range has been extended to include private sector. ARIZ is present in over 35 countries, mainly in Africa with some 80 partner banks worldwide. Since 2000, ARIZ commitments reach €327 million, for a total of 613 guarantees. Between 2008-2010, ARIZ translated into €700 million finance for small and medium business finance, giving access to finance to 1,650 SMEs and representing 74,500 jobs. €108.4 million of guarantee have been engaged in 2012.
The Mediterranean SME Guarantee Facility
The project is a joint and regional response to the recent Arab spring events and is developed together with the European Investment Bank and the International Finance Cooperation (all together the IFI Partners). It is a multi-year risk sharing facility with local commercial banks. Several risk sharing operations will be signed under the Facility with respect to portfolios of SME loans arranged by the selected banks. And under each risk sharing operaton, the IFI partners with severally guarantee the payment of up to 50% of the losses incurred by the banks under the guaranteed portfolio. The Facility will initially target five countries: Egypt, Jordan, Lebanon, Morocco and Tunisia. The Facility will have a mobilization impact (access to finance) by enabling the local banks to provide local currency loans on a sustainable basis. It will give the banks an effective risk management tool and thereby enhance their capacity to absorb the increased level of demand affecting SMEs. The aim of the Facility is to help bridge the financial services gap for small businesses and to make a meaningful contribution towards greater financial inclusion in the Mediterranean Partner Countries. The first phase of the project costs €200 million, which is financed by EIB and other development institutions (€50 million by AFD).