A fund to improve access to finance for climate and green-oriented small and medium-sized enterprises (SMEs) in Africa has been established by the Africa Guarantee Fund (AGF), a pan-African non-bank financial institution owned by the African Development Bank (AfDB).
Known as the Green Guarantee Facility, the fund is to enable financial institutions to fund African SMEs whose investments ensure sustainable growth and climate-resilient development in African economies.
The Charge d’Affaires at AGF, Mr Germain K. Dodor, made this known at a press conference yesterday in Accra to announce the Financing for Sustainable Development Conference. The event is scheduled to take place today in Accra.
The conference, which is supported by International Trade Centre (ITC) and the Nordic Development Fund (NDF), seeks to expand access to finance for green growth-focused SMEs in Africa.
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The NDF is a joint Nordic finance institution which supports climate change and development in low-income countries, while the ITC is the joint agency of the World Trade Organisation and the United Nations which assists SMEs in developing economies to become more competitive in global markets.
Objective of the facility
According to Mr Dodor, the Green Guarantee Facility, which was established with support from the NDF, has the potential to create employment across Africa through the SMEs accessing green financing.
The facility, he said, had a capacity development component for both financial institutions and SMEs to build knowledge and capacity of banks in Africa in the green economy, as well as help to mitigate the risk associated with financing climate-friendly investment.
The establishment of the facility, he said, was also inspired by the Paris Agreement which pushes for governments from around the world to take climate change seriously.
With a strong conviction that the engine of growth in Africa was the SME sector, Mr Dodor said he was certain that the facility would help expand the pool of available financing to the SMEs.
The conference, Mr Dodor said, would be followed by a training workshop for selected staff from selected financial institutions on how to leverage green finance and the AGF Green Guarantee Facility.
He said the conference would provide an important platform to discuss the funding of climate change mitigation and adaptation; climate-conscious investments; the risk climate change poses to a financial institution’s portfolio; and the potential for climate change regulation to spur the development of new products and services for individuals and SMEs.
Mr Dodor also said there would be discussions on the financial sector’s role in sustainable development and the need to make sustainability part of the organisational culture.