MICROCAPITAL BRIEF: DFC, USAID, African Union’s AUDA-NEPAD Partner to Expand Access to Finance for MSMEs in Tanzania, Zambia, Malawi, Nigeria

21 June 2022

The US Agency for International Development (AID) and the US International Development Finance Corporation (DFC) recently joined the African Union Development Agency (AUDA-NEPAD), which was founded as the New Partnership for Africa’s Development, to provide loan guarantees to support micro-, small and medium-sized enterprises (MSMEs) in Tanzania, Zambia, Malawi and Nigeria. The goals of the partnership are to expand access to finance, food security and economic growth by combining DFC’s guarantees with technical assistance from USAID and the networking and implementation expertise of AUDA-NEPAD.

The guarantees – which range in exposure up to 50 percent – enable: (1) USD 34 million for small and medium-sized educational enterprises as well as informal businesses in Tanzania; (2) USD 20 million for MSMEs in Zambia to minimize climate change and food shortages; (3) USD 10 million to increase financial inclusion in Malawi in the “agriculture, clean cooking, fisheries, and sustainable forestry sectors;” and (4) USD 10 million to expand access to finance for women-led MSMEs in Nigeria.

Headquartered in South Africa, AUDA-NEPAD is a programme of the African Union that mobilizes resources, coordinates projects and supports capacity building. Founded in 2002, the African Union coordinates the efforts of 55 countries “to drive Africa’s growth and economic development.” Its 2020 budget totaled USD 647 million.

DFC was launched in 2020 to “help businesses expand into emerging markets, foster growth and improve lives in the developing world while reinforcing US foreign policy and national security interests.” The organization issues equity placements, insurance, technical assistance and research in sectors such as energy, medicine, infrastructure and technology. During 2021, DFC brought in net income of USD 162 million, closing the year with assets of USD 15 billion.

Founded in 1961, USAID provides international economic and humanitarian assistance. It is active in areas such as economic growth, agriculture, trade, health, democracy, conflict prevention and humanitarian assistance. As of 2021, its total assets amounted to USD 44.5 billion.

Source: Micro Capital

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