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African Guarantee Fund (AGF) for Small and Medium Enterprises

The Africa Commission has called for the establishment of an African Guarantee Fund (AGF) for SMEs. This initiative was set up in the second quarter of 2010 in partnership with the African Development Bank (AfDB), the Danish Government (DANIDA) and the International Finance Corporation (IFC), who are currently implementing the initiative. The objective of the AGF, as envisaged by the Africa Commission, is to set up a regional conduit for channeling guarantees and technical assistance for both financial institutions and the SME sector which will permanently improve access to finance for SMEs. AGF financial support to the African SME sector and to the partner lending institutions (PLIs) will be through an appropriate and balanced mix of interventions. In doing so, the AGF will contribute to setting the conditions for increasing employment, especially among the youth, and to the development of the financial sector, ultimately increasing the income, productivity and competitiveness of African economies.

The AGF will provide: (i) loan portfolio guarantees to PLIs; (ii) financial guarantees to PLIs; (iii) capacity development support for PLIs; and (iv) capacity development support for SMEs. Through the supply of these products and services, the AGF will help improve access to credit for SMEs as they start up and grow their businesses.

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