Impact investor responsAbility Investments AG has signed a deal worth Sh606.6 million ($5 million) with African Guarantee Fund (AGF) to insure loans issued to small businesses.
The facility will increase lending to women-owned agribusiness as well as climate-focused businesses involved in energy efficiency, renewable energy, natural resource management and climate insurance.
AGF loan guarantee now enables responsAbility to issue loans to SMEs without worrying about loan defaults.
In Kenya, agri-SMEs sub-sector face numerous challenges such as access to finance, talent, and the ability to attract and retain qualified employees, hindering them from achieving their full potential.
Others are an ecosystem of support and collaboration between public, private, and financial players; access to knowledge that strategically supports development; and access to markets, including information, connections with suppliers and clients, and physical infrastructure.
ALSO READ: KBL Set To enroll 5,000 new Farmers to grow Sorghum
“Agri-businesses tend to have higher risk profiles and limited cash flow compared to equivalent SMEs in other sectors. Our risk-sharing partnership will allow responsAbility to scale up lending activities to agribusinesses across Africa enabling agri-SMEs to play a bigger role in connecting different components along the food production value chain,”
“This partnership demonstrates our commitment to African SMEs and to the continent’s sustainable development by supporting the growth of agri-SMEs, increasing their productivity and enabling them to adapt to the changing environment,” AGF Group CEO Jules Ngankam said.
The partnership will play a critical role in bridging an estimated Sh89.8 trillion ($74 billion) annual financing gap facing Agri-SMEs in sub-Saharan Africa.
“This partnership reflects the alignment of our values in fostering a sustainable agricultural sector. Additionally, it shares our vision of Africa’s key role in future global food production,” responsAbility Kenya and Head of Financial Institutions Debt Africa Country Director Michael Fabbroni said.
SOURCE: Capital business
