To support economic activity and job creation in 10 countries across sub-Saharan Africa, IFC today announced an investment in a risk-sharing facility for the Bank of Africa Group (BOA) that will ease access to finance for smaller businesses, including those in fragile and conflict-affected countries and in the Sahel.
IFC will invest $77 million in the risk-sharing facility to scale up BOA’s lending to small and medium enterprises (SMEs), including women-owned businesses, in Benin, Burkina Faso, Côte d’Ivoire, Ghana, Madagascar, Mali, Niger, Senegal, Tanzania, and Togo. IFC’s investment will guarantee 50 percent of an aggregate loan portfolio of up to $154 million equivalent to businesses in the agriculture, trade, energy, construction, and other sectors.
Through the facility, BOA is expected to make 12,000 new loans, of which at least 2,000 will be to women-owned businesses, which often face greater barriers accessing finance. IFC will also provide advisory services to help BOA strengthen its portfolio of women-owned SMEs across its affiliates in the ten countries.
“The asset transformation to increase our exposure to SMEs constitutes one of the three pillars of our strategy. Indeed, we are convinced of the driving role of SMEs. We thank IFC’s initiative that will help BOA to boost our SMEs penetration with more strength and confidence,” said Amine Bouabid, Group Chief Executive Officer of BOA.
“Ramping up access to finance for SMEs is pivotal when macroeconomic headwinds and supply chains disruptions are hampering growth, innovation, and economic activity in Africa, particularly in fragile, conflict-affected and low-income countries,” said Aliou Maiga, IFC’s Regional Industry Director for the Financial Institutions Group in Africa. “IFC’s deepening partnership with BOA reflects our strategy to support financial inclusion, access to credit, and more broadly, private sector development on the continent.”
Accounting for up to 90 percent of all businesses in sub-Saharan Africa and representing 38 percent of the region’s GDP, SMEs are the backbone of African economies. However, many SMEs are held back by a lack of access to finance. According to World Bank enterprise surveys data, the SME finance gap in the ten target countries is $21 billion and that 53 percent of SMEs are either partially or fully credit constrained.
IFC’s investment is supported by the Global SME Finance Facility (GSMEF), a blended finance partnership with donor funding from the United Kingdom and the Dutch Government; the Women Entrepreneurs Finance Initiative (We-Fi); and the Women Entrepreneurs Opportunity Facility launched by IFC through its Banking on Women Program, and Goldman Sachs 10,000 Women.
Today’s announcement builds on a 2018 multi-country risk sharing facility IFC established with BOA, with GSMEF’s support, to encourage smaller business growth in eight African countries.
The project also aligns with IFC’s pledge to support the reduction of the SMEs financing gap in sub-Saharan Africa under the Alliance for Entrepreneurship in Africa.