Scaling green financing for SMEs in Africa

The African Guarantee Fund and the United Bank for Africa have struck a significant agreement that will see UBA providing $100 million in fresh loans to Small and Medium Enterprises (SMEs) and businesses across the 20 African countries where the bank operates. This move aims to boost economic growth, support local businesses, and foster sustainability across the continent. Jules Ngankam, the Group CEO of the African Guarantee Fund, recently appeared on CNBC Africa to shed light on the impact of this initiative and outline the plans to scale green financing for SMEs in Africa. The focus of this partnership is to promote green financing for SMEs and businesses that prioritize environmental sustainability and resilience. Green finance has been rapidly gaining traction, with a significant increase in the level of financial flow in recent years. For instance, global green bond volumes surged from $15 billion in 2014 to $600 billion in 2022. Market experts anticipate that the total green capital flow could reach $100 trillion by 2050. To further drive awareness and collaboration in the green finance space, the African Guarantee Fund, with the support of the Nordic Development Fund, organized a green finance conference in Nigeria. This event aimed to educate stakeholders, build partnerships, and pave the way for sustainable financing solutions. Ngankam emphasized that any SME offering environmentally-friendly goods and services can access the African Guarantee Fund's green finance products. The ultimate goal is to unlock $10 billion in financing for SMEs over the next decade, with 20% allocated to green projects, totaling $2 billion. The African Guarantee Fund has already facilitated over $400 million in green financing, signaling its commitment to promoting sustainable business practices. Success stories from the Fund's initiatives include partnerships with organizations like the Clean Cooking Alliance, Empower Energy, CIMA, and Green YOLO. These collaborations have supported investments in clean cooking technologies, renewable energy projects, and solar power infrastructure across various African regions. Ngankam also highlighted the Fund's role in financing a 20-megawatt solar plant extension and a 5-megawatt battery storage system in Madagascar, contributing to the country's renewable energy goals. As the African Guarantee Fund continues to drive impact and foster green financing for SMEs, the partnership with the United Bank for Africa marks a significant step towards a more sustainable and resilient business landscape in Africa.