A risk sharing finance agreement worth 50 million euro has been signed to support small and medium scale enterprises (SME) in Africa. The arrangement is expected to reflect on Sierra Leone’s fledging small and medium sized industries.

Part of the outcomes of the recently held Africa Investment Forum (AIF) Market Days held in Rabat Morocco, the agreement is being funded by the African Development Bank (AfDB) and the Bank of Africa SA (BoA).It would catalyse private-sector financing across the African continent and amplify more continental initiatives. the initiative is anticipated to generate up to EUR 200 million in additional commercial trade across more than 20 African countries, including transitional economies. FS sources at the forum spoke of the benefits of the agreement. “This collaboration is strategically designed to target SMEs operating in critical sectors such as agriculture, pharmaceuticals, automotive, transport, and telecommunications.”

The agreement has potential to facilitate enhanced financing and support mechanisms for local African banks engaged in international operations. The Bank of Africa SA aims to augment its financing capabilities and confirmation lines with foreign counterparts, thereby strengthening the financial ecosystem for SMEs across various sectors.

Ahmed Rashad Attout, director, Financial Sector Development at the AfDB explained further “We will be working together in Morocco and on the whole of the continent to strengthen the financial inclusion of SMEs involved in foreign trade, by offering them the means to achieve their full potential on a larger scale.”

Khalid Nasr, Executive General Manager at Bank of Africa SA responsible for Morocco and Corporate & Investment Banking, highlighted the transformative potential of the partnership. “We are delighted to enter into this new strategic partnership with the African Development Bank, a key step in our commitment to promoting foreign trade in Africa,” he stated. “This risk-sharing agreement will facilitate access to finance for African SMEs, opening up new growth prospects for them.”

SMEs remain the backbone of Africa’s economy, contributing significantly to job creation and economic diversification. These enterprises, however, face formidable challenges in accessing financial resources, particularly for international trade activities. The newly established risk-sharing mechanism is expected to alleviate some of these hurdles, providing SMEs with the necessary tools to expand their market reach.