Zambia geared for African Guarantee Fund facility

ZAMBIA is expected to align the newly-established K20 million-Credit Guarantee Scheme to the African Guarantee Fund to enable local smallholder farmers and other entrepreneurs to access a variety of resources offered by the continental body.
Minister of Finance Felix Mutati said small-scale farmers and other small and medium enterprises (SMEs) have demonstrated good commercial viability but limited access to credit facilities offered by banks diminishes their innovations.
“This is due to inadequacy of collateral and lenders’ [banks] limited understanding of the SMEs business model, so by April 2017, Government is officially establishing the Agriculture and Industrial Credit Guarantee Fund for SMEs to facilitate access to affordable financing.
“This facility, whose initial funding is K20 million, will ensure SMEs contribute strongly to employment generation and economic growth since 50 percent of the risk will be absorbed by the fund,” he said in a recent interview after officiating at the Green Financing Conference.
Nevertheless, Mr Mutati said Government is looking at various ways of increasing the portfolio of the Credit Guarantee Fund because it is important in alleviating the constraints facing the SMEs in accessing finance.
“There is need to align it to the African Guarantee Fund for SMEs to access a wide variety of resources. We all know that SMEs are not asking for help but support since their ideas create jobs, improve livelihoods and increase tax revenue,” he said.
The African Guarantee Fund (AGF) is a pan-African non-bank financial institution officially launched in 2012, with the founding shareholders being the Danish International Development Agency; the Spanish Agency for International Co-operation and Development (AECID) and the African Development Bank.
The AGF was recently joined by the government of France through the French Development Agency (AFD) and the Nordic Development Fund (NDF).
The primary mandate of AGF is to facilitate access to finance for SMEs by sharing potential risk and providing capacity development to financial institutions.
Notable achievements include signing of US$ 400 million of guarantees across 38 countries in Africa, partnerships with 60 financial institutions and over 1,300 SMEs accessing finance with 70 percent being led by youth and 30 percent by women.

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