AGF, AfDB partner to boost lending to women SMEs in Nigeria

The African Guarantee Fund (AGF), a pan-African financial institution, has joined forces with the African Development Bank (AfDB) Group to increase Nigerian banks’ lending to small and medium enterprises (SMEs) owned by women.

AGF will take on 70 percent of the credit risk, while banks will take 25 percent, to encourage financial institutions to finance more businesses run by women.

Jules Ngankam, AGF group chief executive officer (GCEO), said his firm is taking this step because women face challenges in accessing capital due to perception issues.

He made this remark at the ‘AFAWA finance series’ on Tuesday, a programme under AfDB’s affirmative finance action for women in Africa (AFAWA) initiative.

Ngankam said: “Women SMEs suffer from three perception challenges. The first one; they are African. They say Africa is the riskiest continent in the world.”

“The second thing, they are SME; SME is the riskiest business. And third, they are women. They are the riskiest gender. So when you combine all these three, then it becomes difficult to get (loan).”

Ngankam said AGF will help banks better understand the risks involved in doing business with women and distinguish between the perceived risks and the real risks.

He also said that AGF will assist women in securing loans without having to provide traditional collateral like land.

“In Africa, 70% of women are excluded financially, including in the areas of access to credit, land ownership, job opportunities, leadership positions and wealth creation. These imbalances have been one of the factors limiting Africa from reaching its full potential,” Ngankam said.

He added that the loans are available to women-owned SMEs in all sectors.

Lamin Barrow, AfDB’s director general for the Nigeria department, said there is a $42 billion financing gap for women-led SMEs that AFAWA initiative aims to close by improving women’s access to finance.

He said that in over two years, AFAWA has approved $1.2 billion for on-lending to women-led enterprises in 32 African countries.

He also said that by 2026, the initiative hopes to have raised $5 billion in financing for African women-led businesses.

Grace Ogbonna, the acting permanent secretary and economic research director at the finance ministry, who spoke on behalf of Wale Edun, the finance minister, said the lack of funding for women SMEs needs urgent attention.

She said that to ensure that women have equal opportunities that enable them to fully participate in Nigeria’s economic growth, there must be a collective effort.

“Women constitute a substantial portion of our population and their full and equal participation in the economy is not just a matter of social justice but it is also one of economic parity,” she said.

Beth Dunford, AfDB’s vice president for agriculture, human and social development, said there is a growth opportunity in Nigeria if SMEs are provided with adequate support.

She said that SMEs have the potential to accelerate Nigeria’s progress towards its economic development goals.