AfDB SME Program-Advans Cameroon: Enhancing inclusive growth and job creation in Africa

26/09/2014
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Enhancing inclusive growth and job creation in Africa

The Board of Governors of the African Development Bank Group (AfDB) through its private sector window has approved a 1 million Euro line of credit (LOC) equivalent in Central African CFA francs (XAF) to Advans Cameroon.

Advans Cameroon is a microfinance institution (MFI) started in 2007 in Cameroon with increasing focus on SMEs given the potential market opportunities. Advans Cameroon had 38,000 entrepreneurs and individual borrowers (men and women) as clients as of end-2013.

The LOC will support SME sub-projects and these are well-diversified spanning all economic sectors including construction, telecom, hotel, agribusiness, among others. Funds are required for various purposes including: capital, inventory and project finance, term loans and business loans, etc. Two thirds of above loans is for investment loans (longer term), and it is expected that the AfDB LoC will contribute to strengthen Advans’ ability to provide longer tenor investment loans in future. The SME portfolio is expected to add 200 loans during 2014 with a value of around US $2.4 million. The AfDB loan with lead to a further SME loan growth over the period of 2015-2016 and beyond. The AfDB loan will also assist Advans to engage in new sectoral activities such as rural agriculture related SME activities which are currently underserved. This will address a key gap in SME financing in Cameroon. Early estimates are that the LoC would contribute to SME business growth and thus job creation in the order of between 250 and 500 jobs. Advans Cameroon is part the AfDB’s Africa SME Program to develop and expand its SME financing activities and provide medium- to long-term financing options to local SMEs in Cameroon.

Approved by the AfDB’s Board of Directors in July 2013, the Africa Small and Medium Enterprises (SME) Program is a four-year, US $125-million funding program combined with a US $3.98-million technical assistance package granted by the Fund for African Private Sector Assistance (FAPA), which aims to supporting micro, small and medium enterprises (MSMEs) in Africa. SME Program will provide the necessary longer term finance and a technical assistance package to address a number of constraints faced by around 25 target financial institutions and their SME clients across Africa.

Throughout its ongoing selection process, the SME Program will avail further longer-term resources to thousands of SMEs, including women and youth, thus contributing to job creation, poverty reduction and inclusive growth on the continent.

About the Fund for African Private Sector Assistance

The Fund for African Private Sector Assistance (FAPA) is a multi-donor thematic trust fund that provides grant funding for technical assistance and capacity building to support implementation of the Bank’s Private Sector Development Strategy. The Government of Japan, African Development Bank, the Austrian Development Bank and the Government of Austria are the contributors to the fund, which to date has provided US $42 million to 47 projects across the African continent. The FAPA portfolio includes regional and national projects in sectors such as business enabling environment, financial intermediation, infrastructure, trade and micro, small and medium enterprises.