MICROCAPITAL BRIEF: African Guarantee Fund to Back Additional $25m in Lending by Oikocredit to Microfinance Institutions; Small, Medium-sized Enterprises (SMEs); Women-led Businesses - Including in Agriculture, Renewable Energy Sectors

Oikocredit, a cooperative investor based in the Netherlands, recently signed an agreement valued at USD 25 million with the African Guarantee Fund for Small and Medium-sized Enterprises (AGF). The deal increases the parties’ 10-year loan guarantee volume to USD 43 million, allowing Oikocredit to increase its lending to African businesses in a range of categories, including small and medium-sized enterprises (SMEs), microfinance institutions (MFIs), and firms led by women. Among the sectors Oikocredit will continue to support are agriculture and renewable energy. Oikocredit and AGF have worked together since 2013.

In addition to the guarantee, AGF will grant approximately USD 400,000 to the Stichting Oikocredit International Support Foundation to train staff, deploy risk assessment tools, perform market studies and support product development. The purpose of the foundation is to fund both “Oikocredit in the various activities it deploys in low-income countries and also assist Oikocredit partners in those countries.”

AGF CEO Jules Ngankam noted, “With the current guarantee enhancement, Oikocredit can now further extend its intervention towards facilitating financing of women-led and women-owned businesses… through the AFAWA [Affirmative Finance Action for Women in Africa] Guarantee for Growth program, which is implemented by AGF.” AGF and the African Development Bank Group launched AFAWA in 2016.

Founded in 1975, Oikocredit invests debt and equity in financial inclusion, agriculture and renewable energy in Africa, Asia and Latin America with the goal “to invest responsibly… to improve the quality of life of low-income people or communities in a sustainable way.” As of March 2021, Oikocredit finances approximately 550 partners worldwide and has total assets of EUR 1.24 billion (USD 1.50 billion).

AGF, a non-bank financial institution, was founded in 2012 by the African Development Bank and the development finance institutions of eight European countries. As of year-end 2019, AGF has outstanding guarantees totaling USD 682 million.

By Zachary DeLuca, Research Associate

Sources and Additional Resources

Oikocredit press release
https://www.oikocredit.coop/k/en/n2613/news/view/345467/9049/oikocredit-signs-major-new-loan-guarantee-agreement-with-african-guarantee-fund.html

Oikocredit homepage
https://www.oikocredit.coop/

African Guarantee Fund homepage
https://africanguaranteefund.com/

African Guarantee Fund annual report
https://africanguaranteefund.com/wp-content/uploads/2021/04/AGF-Annual-Report-2019-Smaller-Version.pdf

Previous MicroCapital article on Oikocredit
https://www.microcapital.org/microcapital-brief-oikocredit-lends-9m-to-sidian-bank-for-smes-in-kenya/

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