The African Guarantee Fund (AGF) has provided US$15 million to go towards financing small and medium enterprises (SMEs) in Malawi.
AGF Chief Executive Officer Jules Ngankam announced the news in Lilongwe at the opening of the eighth edition of the green finance conference.
AGF is working with local banks to provide flexible loans to SMEs, including those offering services related to managing climate disasters such as floods and droughts.
Ngankam stated that SMEs make significant contributions to Malawi’s economy and that his organization is committed to supporting them.
“Our guarantee is to give more comfort to financial institutions as they develop their portfolio towards the green economy, to make sure that they meet the requirements of their investors, of the regulators and more importantly the risk quality of their SME customer. In addition, the guarantee is coupled with a technical assistance component, because we believe that beyond the financial products that we provide, we need to build skills for SMEs as well as financial institutions,” he said.
Ngankam said his organization recognizes the importance of public and private sector partnerships if we want to succeed. He said this is why the Green Finance Conference discussed possible synergies that will enable all of us to achieve the goal of sustainable development.
He assured the Malawi Government of his organization’s willingness to work closely with the country to develop specific programs and products that will support SMEs to drive the economy of the country.
While welcoming the gesture, Bankers Association of Malawi (BAM) Chief Executive Officer, Lyness Tamandani Nkungula, called for the inclusion of all local banks in supporting SMEs with loans.
Nkungula said SMEs create a lot of jobs in many countries.
“And for this reason, 95 percent of the economy in most African countries like Malawi is made up of SMEs,” Ngankam said.
Speaking on behalf of the Malawi Government, the Minister of Energy Ibrahim Matola thanked AGF for supporting green SMEs in the country.
Matola said the private sector is crucial in the development of clean energy.
“Climate change is a development issue that needs to be dealt with holistically. Climate change affects the budget negatively in the sense that the Ministry of Finance has to come in with budgetary resources to implement mitigation and response mechanisms designed to minimize negative effects of climate change. Apart from budgetary allocation, climate change affects growth prospects either through drought induced shocks or flooding as has been the case with Cyclone Idai, Gombe, Ana and recently Freddy,” he said.