Seed Capital Assistance Facility (SCAF)

The two biggest challenges that investors face in providing seed capital financing to early stage projects and companies are the higher transaction costs and insufficient returns offered by these small, less mature and more risky ventures. SCAF is designed to address these two issues, offering investment fund managers two types of cost-sharing support for those willing to include a seed investment window within their overall investment strategy.
SCAF's enterprise development support shares costs associated with sourcing deals, enterprise development services and seed scale investment transactions. As part of this arrangement, the fund manager commits to providing enterprise development services to qualified local entrepreneurs to identify and develop a pipeline of early stage clean energy investment opportunities.
SCAF also offers seed capital support to offset the hurdle of higher perceived risks and lower expected returns when dealing with early stage clean energy project and enterprise developments. SCAF support ranges from10% to 20% of each seed capital investment and is used to cover some of the elevated project development costs that normally are financed by the project developer, such as technical assessments, environmental impact analyses and other aspects of the permitting process.
SCAF is implemented through the United Nations Environment Programme, the Asian Development Bank and the African Development Bank, with support from the Global Environment Facility and the United Nations Foundation. Technical support for SCAF activities is provided by the Nairobi office of the Frankfurt School of Finance and Management
* For more information on the Facitlity visit the official page.

African Guarantee Fund for Small and Medium-sized Enterprises

A general consensus has emerged around the key role that small and medium enterprises (SMEs) can have in reducing poverty and achieving the MDGs in African countries. In order to make use of their potential, SMEs need increased access to bank credit. African SMEs historically lack access to finance, and this is likely to be exacerbated by the effects of the financial and economic crisis on the continent.

There is a strong economic case for scaling up support for African SMEs. Development assistance for SMEs in Africa remains highly fragmented, with several donors and development finance institutions (DFIs) running a number of SME programs in an uncoordinated way. A regionalization of support and a pooling of resources are required to avoid duplications and inefficiencies, in the spirit of the Paris Declaration and the Accra Agenda for Action.
On 1st June 2012, during the AfDB’s Annual Meetings, held in Arusha, Tanzania, the AfDB’s President Donald Kaberuka, announced the official launch of the African Guarantee Fund (AGF), a market-friendly guarantee scheme aims at easing access to finance for African small SMEs.
The AGF, designed and funded by the AfDB in partnership with the governments of Denmark and Spain, will provide financial guarantees to financial institutions to stimulate financing to SMEs and unlock their potential to deliver inclusive growth in the region.
The AGF is a truly public-private partnership, with other donors, development finance institutions and private investors expected to join to provide additional capital and scale up its operations.SMEs are the best candidates to achieve inclusive growth in Africa as they contribute significantly to income generation and job creation. However, financial access is consistently reported as one of the major obstacles to SME’s growth and development. Only 20 percent of African SMEs have a line of credit from a financial institution. The AGF will help fill this gap.
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