The Green Financing Conference for Small and Medium scale Enterprises (SMEs) to be held in Accra this week will seek to educate stakeholders in the financial sector to take advantage of the benefits of green financing to ensure a sustainable economy.
The conference will include a follow on workshop for financial institutions, where they will be schooled on how to take advantage of green financing, especially the African Guarantee Fund’s Green Guarantee facility.
The Guarantee facility will enable financial institutions to offer more financing to SMEs whose investments ensure sustainable growth and climate resilience.
Speaking at a workshop for journalists, who would be covering the conference, Mr. Germain Dodor, Charge d’Affaires of the African Guarantee Fund (AGF) explained that the Fund’s green guarantee facility helped to improve access to credit for SMEs, a major challenge in the sector, by committing to share the bank’s exposure, in case of a default in repayment by the SME.
This is done by the bank leveraging AGF’s guarantee to provide loans for qualifying SMEs.
He noted that the facility also helped banks and financial institutions to improve their balance sheets by providing fresh cash; 50 per cent of the amount, to help mitigate its balance sheet risk in case of a default on the loan given to the SME.
“In the case of default, we come to the bank and give it cash instead of giving assets, which is very difficult to execute or sell off,” he said.
He reiterated, however, that the Fund did not deal directly with SMEs but rather with the partner banks, through whom they collect information on the SME to be supported.
Mr Anders Aeroe, Director, Division of Enterprises and Institutions of the International Trade Centre (ITC), who are partnering with AGF to organise the conference, said the ITC’s main mandate was to help in poverty alleviation and improving livelihoods, and believed that trade was the best way to do so.
“We believe trade is a good vehicle for uplifting; providing more opportunities for SMEs, for women entrepreneurs and youth,” he said, adding that the centre does this by embarking on donor-funded projects with a focus on SMEs.
He noted that in most countries, SMEs provided the most jobs and with a little help can do well and become internationally competitive.
About 200 participants are expected to take part in the main conference, comprising about 120 SMEs and government and private sector representatives as well as financial institutions.