The United States International Development Finance Corporation (DFC) announced today the financial commitment of four transactions as part of a relationship with the African Union and the African Union Development Agency (AUDA-NEPAD). The new projects will raise a total of $74 million to help African micro, small, and medium-sized enterprises (MSMEs) in Nigeria, Malawi, Tanzania, and Zambia get more funding.
“DFC’s partnership with USAID and AUDA-NEPAD will help MSMEs in Nigeria, Malawi, Tanzania, and Zambia grow their businesses and contribute to economic growth across Africa,” said Jim Polan, Vice President of DFC’s Office of Development Credit. “These transactions show DFC’s ability to target our financial tools to mobilize additional capital and make a development impact in low- and lower-middle-income countries.”
“USAID’s commitment to our African Union partner, the African Development Agency, and our partnership with U.S. DFC has demonstrated how working collaboratively we’ve been able to achieve shared goals across Africa, in this case, in Nigeria, Malawi, Tanzania, and Zambia,” said Patrick Brady, USAID Representative to the African Union. “USAID looks forward to continuing to advance the African Union’s goal of supporting hundreds of thousands of MSMEs across the continent.”
“Businesses across the continent have been facing extreme hardships. Any path to recovery and growth in Africa requires bold investments in favour of MSMEs and financial actors across the continent. These investments will help thousands of African companies, women and men regain their footing and advance their businesses. At AUDA-NEPAD we are proud of this catalytic partnership with DFC and USAID to support 100,000 MSMEs in Africa. It leverages respective strengths and builds structural and tangible prospects for Africans,” Ms Nardos Bekele-Thomas, CEO of AUDA-NEPAD remarked.
This collaboration combines DFC’s financial instruments, USAID technical assistance, and AUDA-NEPAD’s SME platform to bolster financial inclusion and drive economic opportunity in low- and lower-middle-income countries and increase food security and bolster food systems across the continent. With support from USAID and AUDA-NEPAD, the newly committed DFC transactions promoting Africa-led development include:
• Growing agribusiness and financing for smaller enterprises in Zambia: A $20 million loan portfolio guaranty, utilizing $10 million in DFC exposure, will expand credit for small- and medium-sized enterprises advancing food security and climate solutions in the agriculture, manufacturing, tourism, and clean cooking sectors in Zambia.
• Supporting sustainability and local business acceleration in Malawi: A $10 million loan portfolio guaranty, made possible with $5 million in DFC exposure, will expand access to finance for small- and medium-sized enterprises, with a focus on the agriculture, clean cooking, fisheries, and sustainable forestry sectors in Malawi.
• Addressing the gap in women-owned and led enterprises in Nigeria: DFC’s $250,000 in exposure enables a $10 million loan portfolio guaranty to help mobilize capital to MSMEs in Nigeria that benefit women and/or are owned or led by women. This transaction supports DFC’s 2X Women’s Initiative, which addresses the unique challenges women face globally and aims to promote economic empowerment and gender equality.
• Expanding access to low-cost, quality private education in Tanzania: DFC’s $20 million loan portfolio guaranty mobilizes $34 million total to expand access to finance for small- and medium-sized enterprises in Tanzania, including those in the education and informal sectors.