The African Export-Import Bank (Afreximbank) has signed a 30 million dollar agreement with the African Guarantee Fund (AGF) for re-guarantee facility to support African Small and Medium Enterprises (SMEs).

The Director, Trade Finance of Afreximbank, Mr Gwen Mwaba, in a statement on Thursday noted that the facility would give the SMEs in the trade value chain access to funds for their business. The agreement provides for the facility to be used to support the financing needs of African SMEs.

This is aimed at enhancing their access to long term financing, thereby acting as a catalyst to enable them to grow, create more jobs, sustain the existing labour force and develop intra-African and extra-African trade.

According to Mwaba, the re-guarantee facility is aimed at providing an enabling environment to financial institutions in lending to SMEs, which tend to be regarded as a risky segment.

He added that the facility would also enable the financial institutions to transform their short term deposits into long term financing to SMEs.

 “The facility is expected to support positive social-economic changes among the more than 6,000 SMEs that are expected to gain access to guaranteed loans from African local banks.

“It will thereby contribute to trade development, economic growth and poverty reduction in the continent,” Mwaba said.