Luanda - The African Guarantee Fund (AGF) has US$100 million available for the next 10 years to provide financial guarantees to Angolan micro, small and medium enterprises (MSMEs) through the commercial banks in Angola.
The African Guarantee Fund is a non-banking financial institution, whose mission is to support financial institutions in providing financing to small and medium-sized companies in Africa.
The availability of this amount results from the signing of a Memorandum of Understanding between the Angolan Guarantee Credit Fund (FGC) and the African Guarantee Fund, an agreement that foresees to contribute to the development and promotion of financial solutions, aligned with the specific needs of MSMEs.
The document was signed by the FGC´s CEO, Luzayadio Simba, and on the AGF side by CEO Jules Ngakam, an event witnessed by the secretary of State for Budget and Public Investment, Juciene de Sousa, representatives of the National Reserve Bank of Angola, among other partners.
The Memorandum also aims to identify and guide small and medium enterprises that intend to obtain financing through the guarantee lines, as well as to support the development, accounting and financial organization of these companies.
According to the FGC´s CEO, Luzayadio Simba, each year, the AGF will make available USD 10 million, over a period of 10 years, totalling USD 100 million.
According to the CEO, these are new opportunities in terms of credit guarantees for the national business community, essentially constituted by MSMEs and individual entrepreneurs.
"With this Memorandum, we intend to ensure that MSMEs have easier access to financing lines for the materialization of their respective projects with commercial banks, through public guarantees, which will be ensured by the FGC in partnership with AGF", he said.
For Luzayadio Simba, the referred memorandum comes in a context in which proactive measures are needed to explore the current macroeconomic scenario that is characterized by moderate growth of the country's economy, after successive years of economic recession.
This partnership will involve a contribution of 50% each of guarantees to be made available by FGC and AGF, according to the projects that have been presented by the companies to the commercial banks.
AGF has seven billion dollars
On his turn, Jules Ngankam, AGF´s CEO, the institution is making available seven billion dollars for financing small and medium enterprises in more than 200 institutions in Africa, via the African Development Bank (AfDB).
"Today we want to replicate all the success we have in various countries in Africa and here in Angola", said Jules Ngankam, highlighting the importance of the agreement, which is expected to strengthen the south-south partnerships, covering more countries, starting from Kenya (headquarters of the Fund), to Angola, Senegal, Cote d'Ivoire, Benin and other countries.
They are committed to promoting financial facilitation and growth of MSMEs in Angola, reducing the risks they take.
According to study data advanced by the official, in Africa, the MSMEs contribute with 80% of new jobs also contribute with 30% of the Gross Domestic Product (GDP), a reduction considered still very small if compared to other countries such as Europe, between 40% and 50%, and in Asia, up to 60%.
In his opinion, MSMEs are very active, both in the private and informal sectors, but they need a lot of support, such as capacity building.
He also admitted that MSMEs face several challenges in Africa, linked to infrastructure quality, business environment, access to electricity, water, and finance.
Referring particularly to Angola, he says it is a country where the costs to start an MSME business are very low, but when it comes to business development or getting financing from banks, it is still a big challenge.
