Kenya: FSD Africa, African Guarantee Fund sign financing deal for green SMEs

Kenyan Small and Medium-sized Enterprises (SMEs) leading the green transition stand to benefit from a partnership between development agency FSD Africa and financing promoter African Guarantee Fund (AGF).

The agreement aims to offer essential financial support, technical assistance, and capacity building to green SMEs across Africa, facilitating their growth and development.

The agreement establishes a comprehensive collaboration framework between the organizations to enhance sustainable development in Africa, focusing primarily on aiding in the development of financial products for institutions.

The deal includes providing partial credit guarantees for bonds and funds raised on behalf of SMEs, as well as organizing capacity-building events as additional key components.

By offering financial support and facilitating business growth, the SMEs are anticipated to play a crucial role in reducing CO2 emissions, thereby aligning with the 2050 net zero goals.

Moreover, they are expected to create and maintain employment opportunities, particularly for youth and women.

Commenting on the deal, FSD Africa CEO Mark Napier said the move is an important milestone in the efforts to foster sustainable economic development in Africa.

“By leveraging the strengths of FSD Africa and the African Guarantee Fund, we will actively create a robust ecosystem that empowers green SMEs, aiming to facilitate access to affordable long-term funds, thereby accelerating the transition towards a greener and more resilient economy,” Napier said.

AGF Group CEO Jules Ngankam emphasized the significance of green economic transformation in Africa, affirming that the partnership aims to offer bank fundraising guarantees to financial institutions.

“This is to enable them access affordable funds aimed at facilitating loans to SMEs investing in low carbon and climate resilient businesses,” Ngankam said.

“Additionally, we will seek to extend partial credit guarantees to lenders in a bid to enhance credit accessibility for green SMEs.”

The two organizations will offer technical assistance on green financing initiatives, a strategy they deem critical for enhancing the capacity of key stakeholders such as governments, financial institutions, and green SMEs.