The African Guarantee Fund (AGF), a non-bank financial institution jointly owned by the Danish and Spanish governments as well as the African Development Bank (AfDB), is to guarantee small and medium enterprises (SMEs) to have their loans with commercial banks restructured.
The AGF Covid-19 Guarantee facility will allow SMEs to pay less over a given period than what they had been paying and therefore cope better in the face of the Covid-19.
“African Guarantee Fund for Small and Medium-sized Enterprises (AGF) has announced its Covid-19 response aimed at reducing the uncertainties facing financial institutions in Africa as a result of the global coronavirus pandemic.
“AGF’s Covid-19 response is built on the imperative need for commercial solutions over and above the regulatory efforts already provided by the various central banks and governments in the continent,” said the AGF in a statement.
“The African Guarantee Fund’s response sets the platform for economic stabilisation, followed by an economic revival through AGF’s newly developed Covid-19 Guarantee Facility that will, firstly, provide more comfort to financial institutions to restructure facilities that become non-performing because of Covid-19 and, secondly, provide commercial stimulus to the financial sector with the aim of mitigating the deterioration of SMEs’ perceived risk.