The African Guarantee Fund (AGF) has revealed its forward-thinking strategy aimed at fortifying the Small and Medium-sized Enterprises (SMEs) sector in Uganda.

At the core of this endeavor lies AGF’s strategic collaborations, exemplified by its recent partnership with the Uganda Development Bank.

This collaboration, powered by a $5 million Loan Portfolio Guarantee agreement, aims to boost lending to historically underserved business sectors, including enterprises led by women, youth-affiliated businesses, and projects supporting environmental sustainability.

These partnerships were solidified during AGF’s visits to key banks, encompassing centenary bank uganda, stanbic bank uganda, cairo bank, and equity bank uganda, highlighting the dedication to nurturing a resilient financial ecosystem supportive of SMEs.

The SME sector in Uganda plays a pivotal role in steering economic development, generating employment, and alleviating poverty.

Statistics underscore the sector’s dominance, contributing an impressive 90% to the private sector and generating over 75% of the country’s GDP.

Recognizing these contributions, AGF’s comprehensive interventions are designed to spur growth and alleviate challenges faced by SMEs.

AGF’s interventions include guarantee products and capacity development initiatives. Guarantee products serve as a vital risk-mitigation tool for banks, enhancing access to financing for SMEs.

By distributing the risk, AGF empowers financial institutions, including centenary bank uganda and stanbic bank uganda, to lend to SMEs that might be considered high-risk due to insufficient collateral.

This not only empowers SMEs but also bolsters the overall resilience of the financial system. Concurrently, AGF places a strong emphasis on capacity development, acknowledging the significance of equipping partner banks, such as cairo bank and equity bank uganda, with the requisite knowledge and skills to effectively cater to the specific needs of SMEs.

READ ALSO:

A look Into Centenary Bank’s Bold Expansion via WhatsApp Banking

The economic impact of AGF’s interventions is substantial, fostering job creation, revenue generation, and overall contributions to Uganda’s economic growth. The positive outcomes are not merely theoretical but are evident in tangible results. 

Refugees in Uganda, supported by AGF’s initiatives, enjoy increased incomes, reduced transaction costs for economic activity, and potentially more sustainable employment sources, exemplifying the real-world implications of AGF’s efforts.

Strategic partnerships with centenary bank uganda, stanbic bank uganda, cairo bank, and equity bank uganda are integral to AGF’s approach.

These partnerships transcend mere collaborations; they represent a concerted effort to strengthen and elevate the SME sector. 

The Loan Portfolio Guarantee agreements signed with centenary bank uganda and stanbic bank, amounting to $10 million and $5 million, respectively, highlight the commitment to providing affordable financing to SMEs.

Similarly, the collaboration with Equity Group Holdings Plc, aiming to provide a $75 million guarantee fund to four of Equity’s bank subsidiaries, epitomizes AGF’s dedication to supporting sustainable development through increased lending to women-led enterprises.

AGF’s collaborations extend beyond the banking sector, encompassing partnerships with diverse entities. For instance, the collaboration with cairo bank involves a Shari’ah-compliant credit risk guarantee scheme, providing financing for SMEs lacking adequate collateral.

The partnership with Gulf Bank aims to promote enterprise growth in Kenya by facilitating access to affordable credit for SMEs.

Moreover, AGF collaborates with Afreximbank on trade promotion and economic development, showcasing a multifaceted approach to supporting SMEs.

The economic outlook for Uganda, as projected by the African Development Bank, indicates a robust GDP growth of 6.7% in 2024.

This growth is anticipated to be supported by increased economic activities in East Africa and the easing of lockdowns in China.

The projections further emphasize the importance of sustained economic growth, with real GDP growth expected to reach 5.8% in 2024.

However, challenges such as inflation, projected to range from 27.59% to 31.85% in 2024, necessitate proactive measures for economic stability.