Trust participation African Guarantee Fund (AGF)

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The African Guarantee Fund for Small and Medium-Sized Enterprises (AGF) is a fund that offers guarantees to partner financial institutions (PFIs) that provide loans to micro, small and medium-sized enterprises (MSMEs) in Africa. A credit guarantee scheme is essentially a risk-sharing tool. It provides access to financing for MSMEs that do not have access to credit due to a lack of collateral and information asymmetries by covering their share of the loan default risk. In the event of default, the guarantor assumes part of the bank's capital loss. The main objective of the AGF is therefore to promote capital and credit to MSMEs in Africa by insuring against default risks and to help close the financing gap for MSMEs in Africa. In this way, the AGF contributes to sustainable economic development (Sustainable Development Goal (SDG 8,9)), poverty eradication (SDG 1) and reducing inequalities (SDG 10). In addition, the fund also contributes to the promotion of renewable energies (SDG 7,13) through a Green Guarantee Facility. In addition, all of the AGF's guarantee instruments are to be used as part of the Affirmative Finance Action for Women in Africa / AFAWA initiative in cooperation with the AfDB and African financial institutions (FIs) to support MSMEs that particularly ensure the economic participation and empowerment of women (SDG 5). In addition to issuing guarantees, the AGF also supports the PFIs with a Technical Assistance Facility to help them improve their MSME financing capabilities. The first KfW trust investment in 2018 of EUR 25 million was increased by a further EUR 30 million in 2019. Since its establishment in 2011, the AGF has issued guarantees totaling USD 1.3 billion to 169 partner financial institutions, thereby supporting around 24,000 MSMEs with around 149,000 jobs.