African Guarantee Fund (AGF) through its subsidiary AGF West Africa, has today signed an agreement with FSDH Merchant Bank to the tune of N3.8billion to scale up the bank’s SME business portfolio for an initial 5-year period.
Businesses play a major role in most economies, particularly in developing countries. The survival and growth of small-scale businesses is an important contributor to job creation and economic development in emerging markets like Nigeria. However, access to finance is a key constraint to business growth, it is particularly difficult for SMEs and women-led businesses to access funding without difficulties in Nigeria. The partnership between African Guarantee Fund and FSDH Merchant Bank aims to reduce this gap.
In her statement, the Managing Director of FSDH Merchant Bank, Bukola Smith acknowledged the impact of the scheme “At FSDH, we are promoting investments in growing sectors of the Nigerian economy like agriculture, healthcare, technology and the female economy. This transaction will open more opportunities for us to support the growth of the economy on a considerable scale and we will keep working with all relevant stakeholders to maintain this momentum” she said.
She further stated that the agreement with African Guarantee Fund will support the bank’s commitment to assisting women-owned businesses and SMEs in closing the funding gap. “The N3.8 billion credit line will strengthen our short-term business loans and will be deployed directly to mid-sized companies and through SME aggregators, business incubators, investment acceleration programmes for businesses who are willing to scale and our women in business initiative”. Similarly, last November, FSDH Merchant Bank announced a
N2billion funding for women led businesses in partnership with Development Bank of Nigeria (DBN). The recent agreement with African Guarantee Fund further strengthens the resolve to contribute to the economic growth of businesses and entry into new markets.
In his remarks, The Managing Director, African Guarantee Fund West Africa, Bendjin Kpeglo affirmed that the partnership will serve the common interests of both AGF and FSDH Merchant Bank to strengthen, promote, and develop cooperation in creating financial inclusion and support systems for entrepreneurs. “The facility is centered around transforming the SME sector, while also particularly supporting women-led businesses who access less financing due to structural inequalities and discrimination. Through the AFAWA Guarantee for Growth program, we will boost the already existing products that FSDH Merchant Bank avails to women entrepreneurs. The guarantee will also foster sustainable development by unlocking financing for businesses focused on clean energy, cleaner production, green services, climate-smart agriculture and natural resource management.”
As more stakeholders take steps to close the funding gap in Nigeria, there is an undeniable air of optimism for the future of SMEs. Organizations like FSDH Merchant Bank and African Guarantee Fund will continue to operate at the intersection of high-growth businesses and institutional funding, connecting more businesses to funding opportunities, thereby enabling them to propel their businesses and spur sustainable growth in the economy.