Supporting crisis-affected businesses in Africa
New partnership between AFD Group and Societe Generale
To meet the needs of very small enterprises (VSEs) and small and medium-sized enterprises (SMEs) affected by the crisis on the African continent, Proparco has put in place an exceptional guarantee for the financing these businesses can be granted. A longstanding partner of the AFD (French development agency) group and a key player in the financing of the private sector in Africa, Societe Generale is the first Proparco partner financial establishment to deploy this mechanism.
This guarantee, made possible by the support of the French government, allow Societe Generale's subsidiaries in Africa to amplify the support they provide for entrepreneurs. Cameroon, Côte d'Ivoire, Madagascar and Senegal are the first countries to benefit from this offer of loans that are 80% guaranteed by the AFD group.
The economic crisis caused by the Covid-19 pandemic is severely hurting small and medium-sized businesses in Africa, impacting their ability to innovate, create jobs and supply essential goods and services.
Like the State-Guaranteed Loans put in place in France to help businesses weather the crisis, the French State has made a 160-million-euro State guarantee available to the AFD group for VSEs and SMEs on the African continent. The partnership signed with Societe Generale pertains to this guarantee's deployment in a number of African countries.
Once their financing requests have been assessed, businesses with fewer than 200 employees affected by the crisis may be granted loans for a period of between 12 and 48 months. These loans, which can represent up to 3 months of their 2019 revenue, will be 80%-guaranteed by the AFD group.
This guarantee scheme, made possible thanks to the resources specifically allocated by the French State for VSEs and SMEs in Africa, is a key tool of the Resilience component of the Choose Africa French initiative dedicated to supporting startups, VSEs and SMEs in Africa. Announced on 30 November last year in response to the crisis, this Resilience component stands at 3.5 billion euros for the 2018-2022 period and reflects France's commitment to helping entrepreneurs on that continent. Choose Africa uses a broad range of tools: credit lines, guarantees, strategic shareholdings, technical support, etc.
A new dimension given to the partnership between the AFD group and Societe Generale
The AFD group and Societe Generale have built a very close relationship through the years, materialised by the signing of numerous credit lines, guarantees and technical support solutions. Over the last decade or so, the Societe Generale group has thus been one of the main beneficiaries of the ARIZ risk-sharing mechanism proposed by the AFD group to develop the financing of companies in Africa.
"The quality of the partnership between AFD Group and Société Générale, as well as the experience acquired by our two institutions in the financing and support of small and medium-sized African companies, are key assets in the current context. The support of the French State enables Proparco and Société Générale to amplify their joint commitment to entrepreneurs and to provide a response tailored to the needs expressed on the African continent", said Gregory Clemente, CEO of Proparco.
"For many years now, Societe Generale has made the multidimensional support of small and medium-sized businesses a key focus of its strategy in Africa, thus wanting to contribute to African development in a responsible and sustainable way. African SMEs have today been weakened by the economic impact of the crisis, but they still represent Africa's future, as they provide a response to a number of the continent's long-term challenges, notably with regard to job creations and innovation. It is therefore only natural that Societe Generale should be one of the first players to deploy this new mechanism aimed at African entrepreneurs", commented Laurent Goutard, Head of International Retail Banking for Africa, the Mediterranean Basin and French Overseas Territories at Societe Generale.