The German Federal Ministry for Economic Cooperation and Development through German state-owned investment and development bank KfW has allocated Shs326 billion (EUR 76 million) to support Micro, Small and Medium-sized Enterprises (MSMEs) in Uganda and other Sub-Saharan African countries.busi
The funds, within the scope of the Emergency COVID-19 Support Program will be acquired from SANAD Fund; the organisation provides debt and equity finance to partner institutions in the Middle East, North and Sub-Saharan Africa.
With immediate effect, limited support will also be provided to selected countries in Sub-Saharan Africa (Côte d’Ivoire, Ghana, Kenya, Rwanda, Senegal and Uganda)
Dr Günther Bräunig, the Chief Executive Officer of KfW Group said MSMEs are a key economic driver and have come under intense pressure in the coronavirus crisis. This is because governments in these countries responded to the spread of COVID-19 by closing borders, imposing curfews and closing public facilities, shopping malls and markets with devastating effects on the economy.
Further support therefore aims more than ever to improve employment and income development as well as the living situation of the population in the respective countries. Last but not least, the measures also reduce the pressure of migration that weighs heavily on African societies.
“By financing small and medium-sized enterprises in North Africa and the Middle East, the SANAD Fund is helping to mitigate the instabilities and social tensions that have arisen since the Arab Spring in 2011 as a result of high unemployment, inequality and poverty among the population. These have worsened during the current COVID-19 crisis in this region and also in Sub-Saharan African countries. Strong support is therefore needed to counteract the economic downturn,” said Dr Günther Bräunig, Chief Executive Officer of KfW Group.
Since the SANAD Fund was established in 2011, Germany has contributed a total of EUR 253 million to the Fund. In addition, KfW has also supported SANAD on behalf of the EU with EUR 52 million to date. Loans totalling more than USD 950 million have been granted, financing more than 240,000 loans to businesses and households in North Africa and the Middle East. The Fund currently works with 38 partner institutions in 8 countries.
The Fund is set up as what is known as a structured fund with various risk tranches and thus also offers investment opportunities to private and semi-public investors. Through these third-party and market funds as well as returns and interest income, the financing potential is multiplied.