afrol News, 16 April - The US Agency for International Development (USAID) and the African Development Bank (AfDB) have agreed to support entrepreneurs in Africa.

This groundbreaking public-private initiative, kick-started by the signing of a memorandum of understanding by USAID and AfDB, is expected to formalise a collaborative arrangement that focuses on accelerating investment in African small and medium enterprises (SMEs). The partnership will last a minimum of five years.

This latest development signifies the important relationship between the two institutions in promoting private sector development in a continent where entrepreneurship is thriving and creating employment and economic growth.

"Small and medium sized enterprises, as we know, create employment and are a critical component of economic growth," said Henrietta Fore, USAID Administrator.

"This partnership is a prime example of how development organizations can build upon and reinforce one another's strengths. The result is a much-needed expansion of financial services for African entrepreneurs."

The initiative will eradicate several obstacles facing entrepreneurs, small businesses and individuals, including the inability to obtain loans. The USAID-AfDB partnership will enable local and international banks to have greater access to catalytic guarantees, providing a bridge to encourage greater lending to SMEs.

As a demonstration to market the viability of SMEs, private financial institutions are expected to gain the experience necessary to continue lending without additional USAID-AfDB support.

A sum of US $124 million in private financing for SMEs to grow their businesses is anticipated to be mobilised in less than six months. A minimum of 25% will be women-owned businesses.

But enterprises without the joint guarantee would likely not have access to the financing essential for day-to-day business operations, upgrading equipment and technology and capital investments.

By staff writer

© afrol News

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