Entire sectors of Africa’s economy are experiencing a marked slowdown due to the current health measures and the reduction in business activity. In addition to the emergency measures, such as deferred repayments and technical assistance which provided an immediate response to support the most affected private players, AFD and its subsidiary Proparco are stepping up Choose Africa, their initiative to support MSMEs in Africa.
This new EUR 1bn component “Resilience” is France’s contribution to the commitment to a collective effort of USD 4bn for African MSMEs made by some twenty public development banks, including PROPARCO, at the Finance in Common Summit (FICS) organized from 9 to 12 November at the initiative of AFD Group.
Support for African SMEs, a priority for France and AFD Group
This additional commitment is strengthening and scaling up the Choose Africa program. AFD Group has already committed over EUR 2bn under Choose Africa, supporting over 16,000 businesses and tens of thousands of entrepreneurs across the continent. They will thereby benefit from improved access to credit or a strengthening of their capital base. 2,000 companies out of the 16,000 MSMEs supported will also benefit from actions to help strengthen their operational capacities.
Some 200 partners of AFD Group in Africa – incubators, investment funds, local banks, microfinance institutions – are currently contributing to the success of this initiative.
Several projects have already been financed through the Choose Africa initiative:
- In May 2020, in Senegal and Côte d’Ivoire, Proparco and COFINA signed a EUR 10m loan agreement to support the financial inclusion of MSMEs and the informal sector and help them cope with the economic and health crises.
- In 2019, in Mauritania, AFD Group and Attijari Bank Mauritania signed a guarantee mechanism that will cover loans granted to companies for a total of EUR 5.5m. These guarantees will help finance some 140 Mauritanian SMEs.
- In Ghana, Nigeria and Zambia, the start-up mPharma has a mission to facilitate access to prescription drugs on emerging markets and ensure their price is affordable. It is supported by the Novastar Ventures II fund in which Proparco invested in 2019.
- In 2019, in Nigeria, the start-up Rensource benefited from a USD 3m loan from PROPARCO to develop, build and operate over 100 solar mini-grids and supply clean and affordable electricity to 250,000 SMEs over the next 5 years.
- In Rwanda, Bank of Kigali has received a USD 20m loan from AFD which will allow it to support over 200 SMEs in the country. This loan is combined with a technical assistance budget to increase the bank’s capacity to serve entrepreneurs.
“After providing EUR 1.2bn of assistance to health stakeholders in Africa to address the Covid-19 pandemic, AFD Group is proud to be supporting, at the initiative of the French President, economic players on the continent under the Choose Africa initiative. To provide countercyclical solutions to African entrepreneurs hard hit by a crisis that is exogenous to them, while helping them become the architects of a sustainable recovery, France is mobilizing an additional EUR 1bn. This program now stands at EUR 3.5bn and is also contributing to the collective effort of public development banks towards African SMEs announced at the Finance in Common Summit for all those who make Africa the leading continent for entrepreneurship and innovation”, says Rémy Rioux, Chief Executive Officer of AFD.
“The exceptional difficulties and needs expressed by African microenterprises, SMEs and midcaps, including those of French entrepreneurs in Africa, called for an increased financial commitment and the implementation of new and targeted tools. The support from the French Government and the European Union is today allowing us to deploy a new component of the Choose Africa initiative with a set of tailor-made solutions to address the needs of the crisis. This initiative, which has increased from EUR 2.5bn to EUR 3.5bn, is being deployed in partnership with local financial systems”, says Grégory Clemente, Chief Executive Officer of Proparco.