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Nidhi Chavan

Technology and Innovation in Retail 2016, 10- 11 May 2016 | Dubai, UAE

Nidhi Chavan

Nidhi Chavan

Nidhi Chavan was interviewed by the team at Information Exchange Group ahead of their upcoming event Technology and Innovation in Retail 2016.

Do you think innovation and growth go hand in hand?

Yes, very much. The best way to predict the future is to create It and that’s ‘Innovation’. Innovation could be transformational or small; in the form of process or technology but it helps organizations to grow further. It drives business in a smarter way with increased productivity and helps reach new heights of customer expectations resulting from the increased revenue targets.

Does mobile commerce spell the end of traditional stores?

Modern customers are smart and tech-savvy. In current world, everyone likes having information on fingertips before taking any decisions. Mobile commerce helps them with precious input compared to a sales associate, due to abundant information availability. It assists in shopping at stores, trends and pricing. But it does not mean end of physical stores as large amount of customer base still believes in touch and try. I think stores will cater to direct customer services, wider assortment showcase, distribution and fulfillment as they serve full-fledged shopping experiences.

How does the future of the store look to you in the next 5 years? What are the innovations to watch out for?

Future stores will be highly technology enabled. Retailers will try to potentially grab every single opportunity to attract, serve, know and retain their customers.

Interactive promotions with beacons and CRM, quick fulfillments using digital commerce, RFID for right product availability, customer biometrics will be affluent trends. Futuristic drive will be use of virtual reality for customer try-outs and style checks. I also feel, use of loyalty systems with social media integration will become imperative need to understand customer shopping requirements and brand cult.

Do you think skillsets needs to be upgraded to get maximum return on the investments in digital?

Yes, digital era will require both back-end and front-end teams to be more agile and efficient. Teams need to work on new technologies as well as ways of doing things; leaving traditional concepts behind. Retailers will be pressurized to work on accurate demand planning, rich assortments and supply chain i.e. Right product availability @ right time, place and price to support customers. Major process re-engineering and Innovation drives will be adapted by businesses to ride on the digital wave that will demand niche talent or upgrade in current skills.

In a digital world, how important is the physical connection with the consumer?

With rising inflation and high rentals, both warehousing and store spaces will thrive for high returns. Both the channels; be it physical or online, will need high standards of customer service levels to take care of customer expectations. Looking at current scenarios, there are still many services offered only at stores typically in luxury, specialty fashion and precious retailing segment, which wins customer delight. These could be meet and greet, assistance throughout the customer journey, merchandise trials and offering personalized shopping and many more. I think physical connection will be important in that perspective. Digital world can take help of social media space and also make use of their physical spaces either showrooms or customer service centers to cater to their customers.

What are the technologies that you are looking to invest in or closely tracking for your immediate needs?

We are working on enhancing our demand planning and end to end supplier collaboration area. This will strengthen our business strategy and back-end processes. On store front, lot of efforts are invested in promoting brand outlooks for customer journey. The initiatives like CRM, interactive promotions, mobility and social engagement with customers will help us spearhead the competition.



BFI: More Than Just a Service Provider



BFI: More Than Just a Service Provider 1

Banco de Fomento Internacional, S.A. (BFI) is an investment bank in Santiago, Cape Verde, that has been providing its clients with a broad range of quality products and services since it was established in 2002.

CEO of BFI, Luis P. Rodrigues

CEO of BFI, Luis P. Rodrigues

Wanda Rich, editor of Global Banking & Finance Review, met with the CEO of BFI, Luis P. Rodrigues. They discussed how the custom-fit approach allows them to build valued partnerships with their clients, how the impact of COVID-19 must be accommodated to ensure sustainability, and much more.

How has BFI had to adapt operation as a result of the current pandemic? 

The tremendous humanitarian fallout of the COVID-19 crisis will certainly have a correspondent disruptive economic impact. The path ahead is hence an insecure one, driven by plenty of uncertainty.

Being primarily an investment bank, investments will be considered, evaluated and ranked in a different way from now on. Upstream, we foresee three things. One, a regroup on the activity sector’s priorities; two, an even greater care and awareness for overall wellbeing, and three, an ever more meticulous project analysis. Downstream, investors will become more conservative.

Having said that, BFI did not in fact go through a rigid adaptation. Obviously, we had to adapt in terms of workflow as we had to be – and continue to be – aware of needs for remote working and the team’s capacities. However, in terms of business, BFI strategically preferred to specialise in projects and sectors that would pretty much continue to be of relevance in times to come. This includes green energy, environmental issues, health, infrastructure, tourism – all related to wellbeing and, for the most part, normally engaged with authorities. In this regard, the Board did not feel the necessity to adapt the strategic plan.

BFI differentiates commercial banking from investment banking. Why is this so important for Cape Verde?

It is as important for Cape Verde as it is for the rest of the world. Investment banks have different responsibilities and specialise in services that are very much custom-fit and custom-oriented, not mass offerings. Investment banks are much more related to structured projects at the macro level of the productive economy. Commercial banks are fundamental funding machines.

BFI, as an investment bank, attracts savings into productive projects, promotes foreign direct investment (FDI) into local projects, provides diversified investments in state-of-the-art sectors and engages in practices that aim to achieve a levelled wellbeing.

These principles and assumptions are important to the majority of countries, but are even more so for those considered developing countries, such as Cape Verde.

How does BFI assist companies in devising the best plan to obtain funds?

It’s difficult to standardise as each case is unique. Our approach is to place ourselves in our client’s mind, and understand their objectives in order to devise the best plan, regardless of the purposes – fund raising, balance sheet performance, debt restructuring etc.

We allocate a project leader and/or an account manager to follow up with the client. Before we engage ourselves with a project, we must feel confident that we can be of value. We want to create partnerships rather than be a simple service provider.

If we believe we can be of help, we introduce the project into our networking and try to maximise it. BFI works with the most recognised international institutions, with special emphasis on those that target Africa.

BFI is regularly involved in providing comprehensive finance packages for projects in various industries. What are BFI’s advantages compared to local banks, and what is its outlook for the business?

I rather like to think that BFI works with local banks. There is a complementary essence with local banks, mainly with the commercial banks. First and foremost, commercial banks are critical agents in gathering funds. That is why they are keen to evaluate more complex, medium and long-term projects; the simple house mortgages, personal finances and corporate day-to-day businesses do not consume all their needs and, mainly, do not adjust their balance sheet risk in time horizons. If a term deposit – a liability – is gathered for a medium or long period then a correspondent asset, period wise, should be part of their balance sheet. Also, the regulatory limitations – specifically in terms of credit exposure – and balance sheet dimension, prompt syndications between banks, which leads us to work with local banks. We are very keen to work with them.

In terms of outlook for the business, one cannot ignore the impact that this Covid environment has created, and will create. Rather than talking about the disruptive economic impact, I prefer to focus on the new opportunities that will be created. It is certain that the principal investing countries are facing economic impact, which may induce limitations in investment opportunities with a stronger impact on economies that are dependent on the economic performance of others.

But it is up to us – and businesses like ours – to promote alternatives and find the prosperous projects to invest in. COVID-19 is a major market disruptor that has led to unprecedented levels of innovation. Due to the lockdown, so many businesses have had to reinvent themselves with a new ‘business as unusual’ philosophy, a new wave of tools and a new way of keeping in touch. Education will be reimagined. Remote working is a reality. Sustainable sectors must accommodate these factors.

In terms of project preparation and development, is Cape Verde more challenging than elsewhere?

Cape Verde is indeed challenging. I cannot say if it is the most challenging, but it certainly is challenging. There are two main factors.

The first is that Cape Verde’s GDP ranks in between the 10th and 20th percentiles according to international indicators. Its banking sector is also characterised by its limited dimension. Unfortunately, when discussing projects with international partners, dimension is critical. It seems that the positive aspects of Cape Verde are relegated. Thus, it becomes our challenge to emphasise that Cape Verde, according to the World Bank, is one of the top-ranked countries in Sub-Saharan Africa in governance indicators, particularly in the fight against corruption. It also has one of the best business climates in the region with stable political institutions. People are well educated and, as far as foreign policy is concerned, the country remains closely linked to Western Europe, which is a major source of tourism and FDI. The exchange rate cooperation agreement with Portugal guarantees the Cape Verdean Escudo convertibility with a fixed parity. Cape Verde has liberalised all economic and financial operations with foreign countries, and investors are able to open bank accounts in a foreign currency. It is a challenge.

The second challenge is an internal one. A Cape Verdean bank in the middle of the Atlantic Ocean constructed a portfolio of projects with significant and relevant parties in different countries over the past almost 19 years, and strives to achieve greater accomplishments. Given the circumstances, that is another challenge for us – one we undertake with pleasure.

How does BFI help maximum business value?

Customers are at the centre of our strategy. That is the concept for maximum business value. As I had the opportunity of mentioning, BFI is not a simple service provider. We take care of our clients’ projects as if they were our own.

In our line of business, we have the chance to gather plenty of information in different areas, industries, projects etc. Our accumulated experience – meaning critical information, our main commodity – and relationships with our network allow us to determine and prioritise functions, stages and definitions that maximise value for our clients’ businesses.

It has been very useful and important in assessing and following up projects, mainly those under the umbrella of project finance where details may influence outcomes.

Why use a project finance structure as opposed to corporate finance?

Nowadays, long-term infrastructure projects call for solutions that ease some critical issues for their promoters and/or the beneficiaries.

The main aspect is that the amount of debt that can be raised in project finance is based on the project’s ability to repay debt through the cash flows generated by that project alone. In corporate finance, lenders can generally claim for guarantees and collateral assets of the entire company, or even from other entities.

Is that an advantage? We believe so, mainly for long-term projects, which are normally – but not only – participated in by state entities. There are normally turn-key solutions which are optimal. These projects include an A-Z effort: the identification of the need, the formatting of the solution, the choice of partners, suppliers and stakeholders, determining the funding structure, following up the project and closing the deal. Project financing is greatly appreciated in governments that are keen to provide new infrastructures but have budget limitations. This solution may levy public debt issues, increase FDI and establish a financial reputation.

How do you organise the project financing structure to reduce risks?

As I mentioned, there are a number of efforts that go into project finance. One must choose the right partners, assess all risks and ensure a mitigation plan. It is, indeed, a complex procedure.

We rely mainly on our expertise, past experiences, the quality of our partners and, obviously, on the risk mitigation instruments available in the market. Foreign exchange, country risk, operational and other coverages all have entities and instruments defined to address risks. But risks exist in any business. The purpose is to mitigate them as much as possible.

I would say that the best way of mitigating risks is to have an experienced industry partner in the project.

As we specialise in specific sectors, we are at ease with this type of project.

What are the challenges and opportunities you see for investors right now?

That’s a very difficult and broad question for a short answer!

It depends on the type of investor. If it is a private investor or an institutional one, it depends on the magnitude of the investment, the risk tolerance one may assume and the nature of the investment (direct investment versus passive investment). There is a long list of parameters that define the challenges and opportunities for investors. Again, for BFI, each case is unique and our organisation is ready to assess the best opportunities through its private banking unit.

Nevertheless, there are general certainties one may claim: one, that the most daunting challenges a modern investor faces are the volume, means of communication and speed of information available, and two, that if you stay loyal to your principles and investment definitions you will always find interesting opportunities.

Looking back, what was 2020 like for BFI and what is it going to be like in 2021?

The latest strategic plan approved was in 2019, for the three subsequent years.

2020 was the year of consolidation of policies and actions that substantiated the guidelines of the strategic plan undertaken. It was a year of implementing a new IT system, introducing more and better governance policies and consolidating best banking practices. We reinforced our network of partners and knowledge. There were two main drawbacks: we were unable to visit our clients as much as we wished and used to, and the professional training that was projected fell short. Both of these constraints were due to the limitations imposed on travel.

Financially, we reinforced our balance sheet. We will have, shortly, our General Assembly.

For 2021, we will continue striving for excellence, hopefully finishing the implementation of major policies and actions in progress and increasing the proximity with our clients.

We are, in some ways, optimistic about new projects/mandates and about the result of the most recent developments, both structural and technological, that were introduced in 2020 with regard to attracting new customers. We expect 2021 to be a demanding but profitable year. We are very excited and look forward to accomplishing our clients’ goals.

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How data and analytics are transforming the insurance market



How data and analytics are transforming the insurance market 2

Global Banking and Finance Review recently caught up with John Beal, Senior Vice President, Analytics, Insurance, LexisNexis Risk Solutions to understand how data and analytics are shaping the future of the insurance industry globally.

  1. They say data is the new gold. Explain this in the context of the insurance market and how this has impacted your business.

The insurance industry has become more competitive every year and those insurance companies who can improve their business practices through the use of data and analytics will be the winners.

Insurance providers are constantly evaluating new data driven solutions to better segment their customers than their competitors. Added to this, many providers are investing in their own analytics capabilities – this is more advanced in some countries than others. This creates an unending appetite for more and more data, attributes and scores. These factors and the inherent untapped value of our data assets has fueled our growth over the past several years.

  1. You must have a sizeable team to meet this need? 

Today, there are over 130 people across various geographies including Europe, Brazil, and China.  We continue to invest and expand our footprint into more markets and we expect to continue to grow as the demand for analytically derived products increases globally. We continue to research new areas of opportunities in more mature markets, which would lead to organic growth with new product offerings and data analytics initiatives across the organisation.

However, the size of the team is not as important as the breadth of capabilities we bring to our markets. It is not enough to be able to build new predictive solutions, you need to be able to put new concepts into production quickly and efficiently. In addition, insurance providers need to understand relevant benchmarks to understand how they are performing and where they need to invest.  The team offers the range of skills needed to meet these demands.

  1. How has your team structure changed in response to the increasing demand for data insights from the market? 

Overall, our objective is to continuously adapt to the ever-growing demands of our insurance customers by proactively providing actionable, data-driven insights to the market.

We have dedicated Analytics teams that support specific lines of business. Certain product lines require the focus of a dedicated Analytics team because the data sources and processes are highly specialised – Vehicle Build, which is a solution to better evaluate specific Advanced Driver Assistance Systems (ADAS) to support pricing and underwriting, for example. We also have several teams that provide support to these analytics teams and the business. The Analytics Batch team produces hundreds of test files each year for our customer to validate the value of our solutions.

In addition, we anticipated the industry’s demand of analytics coming several years ago and created the Attribute Development Team, responsible for operationalising thousands of new attributes each year to feed the industry’s data appetite as well as supply our internal data scientists with a constant source of new data points in order to create new products.

As we manage hundreds of complex predictive models and tens of thousands of attributes internationally on a daily basis, implementing and maintaining the highest quality and consistency possible is vital to our business. The Analytics Audit team manages this at a global level and constantly looks for process improvements across all of our product implementations.

  1. How do you attract and retain the right skills to your team? Aren’t data scientist in short supply?

Today, almost every industry leverages analytics and is competing for data scientists.  So, the demand for Data Scientists has increased every year. Universities and Colleges are expanding the number of programmes across the globe, but I think there will be a supply shortage for a long time.

To attract talent, we are fortunate to offer what every data scientist dreams about, data. Our data scientists work with literally hundreds of millions and often billions of records to solve our customers’ problems. Many other companies are very limited in the breadth and depth of their data and many lack the ability to pull it all together in a commercially viable application. We do that every day and that is exciting to a candidate.

Our Data Science Rotational Program (DSRP) sees recently graduated data scientists join LexisNexis for a two-year cycle through four different teams. This experience provides a robust hands-on journey from data access, data analysis, model building to model implementation. Right now, we have seven DSRP team members in this programme and we typically hire three new positions each year.

  1. What has been the most exciting development in the past year?

It’s tough to pick one but the Vehicle Build product is a global solution and being tested across the US, UK and European markets today.  We were able to develop a robust product due to the high quality, advanced analytical work that the team undertook.  They took the time to understand the intricate details associated with ADAS features and technology equipped on a given vehicle.  This product has uniquely positioned us to serve the needs of our clients by offering VIN-level insights.

LexisNexis Risk Solutions has logically sequenced and classified hundreds of variations of vehicle safety features and components into a common taxonomy. In doing so, we are enabling insurance providers to more easily ascertain how these features influences a vehicle’s risk profile. These insights can then be incorporated into pricing and claims workflows.

  1. Can you let us in on the team’s focus going into 2021?

Geospatial analytics is an area we think will provide a number of new predictors into our modeling applications. Image recognition is another area we will be looking at and of course, vehicle build attributes and scores hold a lot of promise globally in both pricing and claims areas.  Trends and benchmark reporting has been under a spotlight with the impact of COVID-19, but we see this area expanding across the globe.

  1. What are the big questions coming from customers today?

Adoption of more data and analytics is the competitive advantage Insurance providers are focused on today. They want more attributes for their data scientists to evaluate. They want the ability to test data faster and with larger files so they can make quicker decisions.

The demand for more cloud support is growing. As insurance providers move their own systems to the cloud, they need data and analytics delivered seamlessly.  They are always looking for ways to save expenses while minimising impact to their risk exposure.

  1. How does the process of creating a new data solution work?

If the concept works and the market opportunity exists, we create the final specs for technology to implement. Before the final implementation, our attribute team is involved in order to create the attributes or inputs into the solution and our audit team works with technology to ensure the final product performs as expected.

While this development work is happening, a testing strategy is developed for customers. We may create actionable insight studies or perform retro validations tests through our batch team. The goal of this work is to demonstrate the value of our solution on the insurance provider’s own data.

As we get closer to product launch, we work with our product team to support any required regulatory documents on the solution inputs, outputs and overall performance. Once the product is in production, the batch team continues supporting the validation process for new customers. Finally, we monitor the attributes and scores to ensure they continue to perform as expected. If we see any issues, we work with Product and Technology to address the issue. At some point, the product will need to be redeveloped which means rebuilding the solution under the direction of the Product team. Once that process starts we start the cycle all over again!

  1. What are the biggest misunderstandings/misconceptions about data analytics within the insurance sector?

A big misconception in the industry is that big data and analytics driven products will replace human capital. Data-driven products allow insurance companies to streamline their existing processes and are meant to complement their existing workflow. Human judgment and expertise will always be required to accurately price risk in line with a company’s business strategy. However, data-driven insights can assist with the decision process.

  1. What are the biggest barriers to successful modelling/data analytics and how do you envisage they should be solved?

The time it takes to implement or operationalise an analytics solution. There’s always needs to be a balance between availability and accuracy to ensure the product produces the expected outcomes.  A natural consequence of technology’s ability to deliver solutions quicker each year creates a challenge to continue to find ways to expedite our processes.

  1. What trends do you see in the application of data from the IoT for insurance? 

We do see very positive trends in the application for some IoT devices. We have partnered with several home IoT manufacturers and to validate reductions in home insurance claims – both the frequency and severity due to the presence of the device. Also, with more people at home during the pandemic, we’ve seen the severity of home insurance claims reduce. For example, if an IoT escape of water alarm goes off, being there in person to shut off the water can stop an insurance claim becoming very expensive.

 However, gathering enough performance or claims data to validate the value of any individual IoT device is an ongoing challenge. It takes time for a device to become widely distributed and the data centrally collected. Once that happens, we do expect to see a need to standardise and normalise the data collected by the many different devices that are in the marketplace today. The good news is we have been in this business with telematics devices for many years and we have extensive experience creating device generated attributes and scores.

  1. Are there specific data trends you see emerging through the Covid19 pandemic in terms of how insurers can prepare for future risks around pandemics?

A significant challenge for insurance providers and our own business is any sudden change in consumer behaviour. We all do things we don’t even think about as part of our daily routines.  Shopping for insurance, driving to work and going to the supermarket are just a few activities that just happen. When any of these things stop, insurance providers need to expedite their ability to service their prospects and customers virtually. This includes prefill solutions, data driven underwriting, pricing applications, and contactless claims processing. Fortunately, we have been developing these solutions for years and are in the best spot to help insurance providers interact effectively with their customers.

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Supporting Growth in Africa



Supporting Growth in Africa 3
Jules Ngankam Group Chief Executive Officer African Guarantee Fund

Jules Ngankam Group Chief Executive Officer African Guarantee Fund

Despite the internationally recognized importance of SMEs, African small businesses often have difficulties accessing financing for growth and innovation from the formal financial sector. SME financing is often considered by many financial sector players in Africa to be a risky activity as promoters quite more often than not, fail to come up with the collateral levels required to secure bank facilities. Enterprises (SMEs) are widely recognized as big drivers of economic growth, innovation, regional development and job creation. A strong and vibrant SME sector provides a strong foundation to increase standards of living and to reduce poverty. African Guarantee Fund is a non-bank financial institution whose objective is to promote economic development, increase employment and reduce poverty in Africa by providing financial institutions with guarantee products and capacity development assistance specifically intended to support SMEs in Africa. Jules Ngankam is Group Chief Executive Officer of African Guarantee Fund (AGF), and recently he spoke to Global Banking & Finance Review about today’s business challenges in Sub Saharan Africa, and the financial implications combatting the Coronavirus pandemic. Jules has over 15 years of experience in banking and financial services with leading financial institutions. He joined African Guarantee Fund in 201 3 as the Chief Financial Officer after which he served as Deputy CEO from April 2017 and was thereafter appointed Group Chief Executive Officer in September 2020.

  1. What conditions led to the creation of African Guarantee Fund?

The Small and Medium Enterprise (SME) sector contributes significantly to developing African economies, but it still has a huge unexploited capacity for growth. SMEs make up approximately 80% of Africa’s private sector firms, with 50% being small- scale and 30% being medium-sized. SMEs contribute over 50% of new jobs in Sub-Saharan Africa however, only approximately 20% to the GDP. This is compared to 40-60% of GDP in the EU and the US and even higher rates in growing Asian economies.

For the SME to really play their role of the engine of growth, among other barriers, access to finance remains the strongest obstacle. According to analysts the SME financing gap in the continent is estimated at USD 300 billion.

The acknowledged reticence of the banking system in financing SMEs, especially as regards to the investment needed for development for this class of businesses, is mainly explained by:

  • Low Banks’ long-term deposits; The inability of the SMEs to provide
  • acceptable guarantees and collateral; Inadequate equity for SMEs;
  • SMEs’ poor quality of management.

The African Guarantee Fund for Small and Medium- sized Enterprises (AGF) was established in 201 2 to address the mismatch in the supply and demand of SME financing in Africa.

The aim of AGF is to reduce the risks assumed by the financial sector by sharing these risks through the provision of financial guarantees that mitigate the inability of SMEs to provide acceptable collateral.Supporting Growth in Africa 4

AGF also offers capacity development to financial institutions to improve SMEs’ financial product offerings, by helping banks to better address working capital and long-term financing needs of SMEs; and increasing Banks’ capacity to appraise SMEs by providing technical assistance and strategy to further develop their business.

AGF is a truly public-private partnership involving donors, development institutions, financial institutions and private investors joining forces to support African SMEs.

  1. Can you tell us about the guarantees AGF offer to address the range of financing needs?

AGF offers four main types of guarantee products:

Loan Individual Guarantees

Loan Portfolio Guarantees

Bank Fund Raising Guarantees

Equity Guarantees

The Loan Individual Guarantee guarantees a single loan made by a bank to a single Borrower whose identity is known. The Loan Portfolio Guarantee guarantees a portfolio of loans made by a bank to a borrower segment for which the qualifying criteria have been defined but the individual borrowers are not known at the time of the guarantee agreement. The guaranteed party is not required to get approval of AGF prior the placement of each loan under the guarantee.

The Bank Fund Raising Guarantee guarantees bonds issued by a bank to investors for the purpose of raising long-term resources to finance SMEs.

The Equity Guarantee is issued to cover equity investments in SMEs.

  1. What is the scope to use guarantees?

The most important criteria of AGF’s guarantee is that the end beneficiary has to be an SME.

  1. How does African Guarantee Fund enable banks in Africa to execute their SME strategy?

In Africa, the main source of financing for SMEs is the banking sector. Despite Banks’ increasing interest to provide services to SMEs, they face multiple challenges mainly due to issues of assessing and managing risks. Furthermore, the resources of banks and financial institutions are mostly short-term, and it is therefore difficult for the banking system to easily use their current excess of liquidity to finance the needs of SMEs. Finally, the inability of SMEs to provide acceptable collateral to reduce the lending risks associated to them, the inadequacy of their capital structure and sometimes the poor quality of their management increase the reluctance of the banks to fully support their activities.

AGF products assist financial institutions to scale up their SME lending activities in situation where SMEs are unable to meet collateral requirements; Improves the solvency (regulatory capital) ratios of banks and thus enables them to have a better leverage on their capital; Addresses regulatory requirements of banks’ limited use of short-term resources to finance medium and long-term SME needs; Allows banks to mobilize medium and long-term resources at very competitive price.

  1. How is the AGF opening up financial opportunities and supporting the growth of SME customers?

The challenges SMEs face in Africa are within five key areas:

Access to finance


Access to markets

Human resources

Legal environment and corruption

Amongst these challenges, the biggest one is that of accessing finance.

The SME financing gap is brought about by the following gaps:

Information gap: SMEs lack historical data to enable them to adequately assess their risks due to the fact that most of them do not practice proper book-keeping.

Tenor gap: Banks have short-term resources while the SMEs need more of long-term resources to grow.

Collateral gap: Banks have tough collateral requirements.

Product gap: Bank products are sometimes not adapted to SMEs’ business cycles.

Skills gap: SMEs are unable to attract or afford required talent.

Perception gap: This is the gap between the perceived risk and the real risk.

AGF’s guarantee products and capacity development assistance are designed to tackle the financing challenge by being the missing link between the lending institutions and the SMEs.

  1. What improvements have you brought about in the SME sector since you began operations?

Since AGF began operations, the company has delivered in:

Improving lives in Africa

AGF has supported more than 25,000 SMEs.

SMEs that benefited from AG F guarantees have generated an additional revenue of USO 4 Billion. Approximately 50% of supported SMEs are located in rural areas.

20 Million people were able to access clean energy thanks to SMEs supported by AGF guarantees.

Fostering Jobs Creation

130,000 Additional jobs created

Fighting Climate Change

Cutting 3.8 million tons of C02 equivalent Greenhouse Gas (GHG) 57,005 KW Cleaner generation capacity installed

101 Partner Financial Institutions and 291 SMEs Trained

Promoting Gender Equality

USD 522 million Loans granted to 6,000+ women-led SMEs

328 women-led SMEs Trained

Contributing to Africa’s Competitiveness USO 780 million loans granted to 3,400+ SMEs in the Energy, Infrastructure and Manufacturing Sectors

Contributing towards Food Security

USD 188 million loans granted to 2, 100+ SMEs in the Agriculture Sector.

Partnering for Poverty Reduction

USD 2.5 billion private capital made available in 40 Countries

  1. What are your plans to increase financing to agricultural and renewable energy SMEs in Africa?

In 2015, AGF with support from the Nordic Development Fund, launched the Green Guarantee Facility (GGF) to ease access to finance for SMEs to invest in climate and green growth-oriented economy.

The Green Guarantee Facility brings direct benefits in terms of climate change mitigation and adaptation as well as sustainable employment, poverty reduction, and gender- inclusive financing opportunities.

From the banking sector point of view, green finance is a new sector, of which SME lenders are not very familiar. Besides, SMEs are also not well versed with knowledge and skills to design and manage climate-friendly projects, let alone access to green funding. There exists significant knowledge and capacity gaps in green finance, which the GGF technical assistance addresses.

To-date, AGF in partnership with the Nordic Development Fund and the International Trade Centre has hosted five Green Finance Conferences and subsequent trainings in Zambia, Kenya,

Ghana, Cote d’Ivoire and Senegal.

  1. In November, Fitch Rating confirmed the African Guarantee Fund for Small and Medium- sized Enterprises Ltd’s (AGF) Insurer Financial Strength (IFS) Rating at ‘AA-” (Very Strong), what does this rating mean for the company?

The biggest asset of a guarantee fund is its credibility. The main criteria defining AGF’s credibility is its rating. The rating brings a very strong comfort to our partner financial institutions when assessing AGF’s capacity to assist them in improving their profitability, liquidity and solvency in order to meet the expectations of their shareholders and the requirements of the regulators.

AGF’s rating brings huge benefits to our partner financial institutions:

It provides a higher capital relief to banks as it reduces the required amount of loan provisions.

Allows banks to raise capital at a better cost;

Increases the asset quality of banks’ loan portfolio.

Improves the banks’ Risk Weighted Assets (RWA)

  1. Has AGF had to adapt operations as a result of COVID-19? What are some ways AGF is responding and assisting businesses and individuals during this critical time?

COVID-19 pandemic continues to affect African SMEs and has deteriorated their creditworthiness.

As a consequence, the reluctance of financial institutions to finance SMEs has increased.

It is crucial to provide external stimulus to financial institutions so that they can continue to support SMEs in this unprecedented crisis.

AGF launched a COVID- 19 product that aims to:

Reduce the uncertainties faced by financial institutions in Africa as a result of the global coronavirus pandemic.

Provide more comfort to financial institutions to restructure facilities that become non- performing because of COVID-19.

Provide commercial stimulus to the financial sector with the objective of mitigating the deterioration of SMEs ‘ perceived risk.

Provide technical assistance to financial institutions to enhance their risk assessment approaches to better analyze the impact of the pandemic and reduce the SMEs’ risk perception gap.

  1. In your opinion, what role should financial institutions take to support the social economic development in Africa?

Financial institutions need to increase their support to SMEs by increasing SME lending and designing products that are better adapted to SMEs’ needs.

  1. Are you launching any new products and where do you see AGF in 5 years?

We are constantly improving our product offering to better serve SMEs and achieve the Sustainable Development Goals (SDGs). Our new products mostly follow a thematic approach to close financing gaps in climate finance, women finance, agribusiness, etc.

In 5 years, we see AGF covering all countries in Africa, dealing with most of African banks and managing a guarantee portfolio of USO 5 billion.

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