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The two parties agreed to share the risks of loan guarantee to eligible clients in Tanzania, with the aim of enhancing the outreach impact and reducing duplication of efforts and resources.
« Pass and AGF are determined to ease access to credit facilities by all eligible customers in Tanzania that meet the minimum criteria, » says Pass Managing Director Mr Nicomed Bohay.
Pass, a non-banking financial organisation that facilitates provision of business development and financial services, focuses on commercialising subsistence farming in the country through providing small and medium entrepreneurs with credit facilities.
Pass had envisaged to reach 345,000 entrepreneurs in agricultural sector this year, with projected guaranteed loans of Sh114 billion.
AGF is a Pan-African non-bank financial institution founded by the governments of Denmark, Spain and the African Development Bank to assist financial institutions to partially cover the risks associated with SME financing.
The contract is expected to boost lending to SMEs who deal with agro-processing.
« This partnership has come at an opportune time when the government is pushing for the industrial economy…we look forward to increased guaranteed loans to SMEs engaged in agro-processing activities in Tanzania, » says Mr Bohay.
In developed countries, SMEs account for more than 98 per cent of businesses and create 2/3 of jobs but in Africa they are not playing this role because of the constraints that they face including the lack of or inadequate access to financing.
« AGF is the missing link that enables partner financial institutions to execute their SME financing strategies effectively while bringing their businesses to the required scale, » says AGF Chief Executive Officer Mr Felix Bikpo.