US$12 million in loans to support thousands of small businesses quarrying ‘Development Minerals’ in AfricaJun 8, 2017
Loans for small businesses that quarry, manufacture and trade gravel, clay, granite, gypsum and other local materials critical for development in five African countries
Five thousand micro, small and medium scale Development Minerals operators will now have access to more affordable finance as a result of a partnership between the African Guarantee Fund for Small and Medium-sized Enterprises Ltd (AGF), the African Caribbean and Pacific Group of States, the European Union and the United Nations Development Programme.
AGF will make available US$12 million in credit guarantee facilities to financial institutions in Cameroon, Guinea (Conakry), Nigeria, Uganda and Zambia in connection with loans provided by these to small and medium-size enterprises (SMEs) working in the ‘Development Minerals’ sector, utilising the guarantee facilities. US$12 million will in fact result in up to US$24 million in finance as guarantees underpin 50% of each loan. The financing is expected to boost the livelihoods of approximately 25,000 people and their dependents across some of Africa’s most impoverished communities.
“SMEs create more than 90% of jobs in developing countries and are already major backers of poverty reduction and development at the local level. But SMEs often tell us that they need more finance to thrive, especially those in neglected sectors such as ‘Development Minerals.’ Together with AGF, we are stepping in to fill this gap,” said Barbara Pesce-Monteiro, Director of the UN and UNDP Office in Brussels.
“The development of SMEs is one of the principal solutions to the growth challenges faced by African countries. These businesses are recognized as one of the key drivers of growth and job creation in every modern economy around the world. Unfortunately, African SMEs are not playing this role because of the constraints that they face. Among these constraints, the noted one is the lack of, or inadequate, access to financing,” said Felix Bipko, CEO of AGF.
AGF helps SMEs access finance by sharing potential risk with financial institutions. It also provides training to build their capacity. Since its launch in 2012, AGF has partnered with financial institutions in 38 African countries. More than 4,000 SMEs have benefited from its loan guarantee facilities.
AGF and the ACP-EU Development Minerals Programme will also invest US$200,000 in training financial institutions and SMEs to ensure funds are disbursed and spent effectively. Together, they will run trainings on credit and risk assessment for credit directors, risk managers and risk analysts in the participating countries. At the same time, the ACP-EU Development Minerals Programme will work with ‘Development Minerals’ SMEs to improve their entrepreneurship skills, including accounting, marketing, sales promotion and purchasing.
“We do mining of gravel and construction stones. My dream for our association is growth and to see growth for the whole community at large. I also have a dream of empowering the women. Give us some small funding and we transform our communities,” says Josephine Aguttu who is the lead member of the Busia United Miners Association, a small quarry cooperative in eastern Uganda. Members include 43 miners, of which 20 are women.
“Development Minerals can spur sustainable domestic economic development in Africa, as in other regions, but we need to make sure the artisanal and small-scale operators behind it have the support they need and this includes affordable finance. We are delighted to be partnering with the AGF to make this possible for the benefit of thousands of operators and their dependents,” said Viwanou Gnassounou, Assistant Secretary General of the African, Caribbean and Pacific Group of States.
“A decent job is the best way out of poverty and all over the world the private sector is the main engine for growth and job creation. Through the ACP-EU Development Minerals Programme, the European Union is firmly committed to supporting efficient, inclusive and responsible small businesses. This calls for multiple skills, new instruments and stronger capacities to increase access to finance, competitiveness and innovation,” says Antti Karhunen, Head of the Private Framework Development, Trade, Regional Integration Unit at the European Commission’s Directorate for International Cooperation and Development, DG DEVCO.
The 2030 Agenda for Sustainable Development declares access to finance as a major challenge for SMEs and calls for development-oriented policies that encourage their growth and formalisation.Contact information
Gabriela Flores, ACP-EU Development Minerals Development Programme, email@example.com