MICROCAPITAL BRIEF: DFC, USAID, African Union’s AUDA-NEPAD partner to expand access to finance for MSMEs in Tanzania, Zambia, Malawi and Nigeria


The United States Agency for International Development (AID) and the United States International Development Finance Corporation (DFC) recently joined the African Union Development Agency (AUDA-NEPAD), which was founded under 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 guarantees with technical assistance from USAID and networking and implementation expertise from AUDA-NEPAD.

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

Based in South Africa, AUDA-NEPAD is an African Union program that mobilizes resources, coordinates projects and supports capacity building. Founded in 2002, the African Union coordinates the efforts of 55 countries “to stimulate Africa’s growth and economic development”. Its 2020 budget was $647 million.

DFC was launched in 2020 to “help businesses expand in emerging markets, foster growth, and improve lives in developing countries while strengthening U.S. foreign policy and national security interests.” The organization issues equity investments, insurance, technical assistance and research in sectors such as energy, medicine, infrastructure and technology. In 2021, DFC made a net profit of $162 million, ending the year with assets of $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 aid. In 2021, its total assets stood at $44.5 billion.

By Hasnat Aslam, Research Associate

Sources and additional resources

DFC press release
https://www.dfc.gov/media/press-releases/dfc-collaborates-usaid-and-african-union-support-financial-inclusion-sub

AUDA-NEPAD Home Page
https://www.nepad.org

African Union homepage
https://au.int

YOU SAID
https://www.usaid.gov

DFC home page
https://www.dfc.gov

Previous article by MicroCapital on DFC
https://www.microcapital.org/microcapital-brief-usadf-dfc-launch-african-small-business-catalyst-to-support-smes-in-sub-saharan-africa/

Previous MicroCapital article on USAID
https://www.microcapital.org/microcapital-brief-hdfc-bank-to-lend-100m-to-micro-small-medium-sized-enterprises-msmes-in-india-half-led-by-women- with-support-from-dfc-mastercard-usaid/

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