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EFSD Covid Response: supporting SMES in Africa affected by the crisis
The economic consequences of the Covid-19 pandemic are severely affecting MSMEs in Africa and exacerbating the problems they have in accessing finance, which they already faced before the crisis. In response to the pandemic, in 2020, the European Union refocused the guarantees of the External Investment Plan (EFSD) to support small businesses affected by the crisis and encourage local banks to finance them more.
PROPARCO has obtained a EUR 68m EFSD guarantee under the EU’s External Investment Plan for new financing dedicated to SMEs in Africa, and a EUR 3.7m technical assistance grant to allow it to help financial institutions and their SME clients manage the impacts of the crisis and restart their activity.
With support from the European Union, AFD Group has strengthened the Choose Africa initiative with a new “Resilience” component, with an additional EUR 1bn dedicated to SMEs in Africa from now until 2022.
Through a set of customized solutions, this new “Resilience” component, which is implemented by Proparco, is addressing the needs of MSMEs in Africa hard hit by the health and economic crises related to the Covid-19 pandemic.
- The EUR 68m of EFSD guarantees will allow Proparco to cover part of the risk associated with the loans it allocates to certain key financial institutions, such as microfinance institutions, leasing institutions and banks specialized in the SME segment which will play an essential role in helping microenterprises overcome this crisis.
- The EUR 3.7m of technical assistance grants will be dedicated to technical assistance (administrative, financial or technical) to financial institutions and their SME clients for the management of the crisis or adaptation to the new conditions created by the crisis.
The European Union is thereby allowing Proparco to play its countercyclical role and continue to support financial institutions that provide or will provide small businesses with the financing that is essential for restarting and developing their activities.
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