The AfDB (African Development Bank) has launched a credit facility of up to $2 billion, seeking to fund women-owned small and medium enterprises (SMEs) in Africa.

The AfDB will work with African Guarantee Fund (AGF) in disbursing the loans through banks in the Affirmative Finance Action for Women in Africa (AFAWA) programme.

Banks in Cameroon, Democratic Republic of Congo (DRC), Kenya, Rwanda, Tanzania and Uganda are signing on to the programme.

AGF guarantees half of the value of a loan balance either to a single SME borrower, or half the value of an outstanding SME loan portfolio, and then charges banks a fee of between 1.5% to 3% for the risk guarantee. The programme will build on AGF’s existing business in Kenya and other markets.

Some of the local banks that have struck loan guarantee deals with AGF include NCBA and Ecobank.

The initiative is expected to reach an average of 18,000 women in small and medium enterprises and create 80,000 direct jobs.

It is estimated that African women face a $42 billion (Sh4.6 trillion) financing gap. This is due to the lack of access to collateral in the form of land and property.

A recent study based on a survey with over 1,300 women entrepreneurs across 30 African countries, jointly published by UN Women, AfDB, and Impact Her, revealed that 80% of women-owned small and medium enterprises (SMEs) had to temporarily or permanently shut down their businesses due to the coronavirus pandemic restrictions.