To Increase Financial Inclusion For Agribusinesses In Senegal
The U.S. Agency for International Development (USAID), through the West Africa Trade & Investment Hub (Trade Hub), has launched a $24 million (13 billion CFA) co-investment partnership with the Senegalese financial leasing institution Locafrique to build on its momentum of prioritizing the agricultural sector in Senegal, as well as increasing access to credit for businesses in other sectors.
Currently, most financial institutions are reluctant to increase their support to agriculture because of perceived or real risks. In fact, according to Locafrique, bank lending for agriculture in Senegal hovers at less than 5 percent of sectors receiving loans. However, as the first credit financial institution in Senegal and the second largest in the West African Economic and Monetary Union zone in terms of total assets, Locafrique is committed to blazing a pathway for financial inclusion within the agricultural sector.
“This partnership will not only help consolidate Locafrique’s leadership position in supporting Small and Medium Enterprises (SMEs) that are often excluded or poorly served by the traditional banking system, but also support it in its mission, which is to participate to sustainably transform the Senegalese economy thanks to alternative and innovative financing solutions adapted to the needs and specificities of Very Small Enterprises (VSEs) / SMEs,” says Khadim Ba, General Manager of Locafrique.
This goal will be supported by a $1.5 million (813 million CFA) co-investment grant from the Trade Hub and $22.7 million (12 billion CFA) in private capital and resources from Locafrique. Through the partnership, Locafrique will establish a $22 million (12 billion CFA) line of credit for actors in Senegal’s agricultural and non-agricultural sectors to help increase their viability and competitiveness. It will also expand its services to three new regions in Senegal—Thiès, Kaolack, and Ziguinchor—to facilitate the financial inclusion of at least 440 micro-entrepreneurs who would typically lack access to private capital and bank loans. Locafrique has been operating in two regions, Dakar and Saint-Louis.
Just as crucial for long-term growth within Senegal’s economy, the partnership will contribute to the reduction of youth and women’s unemployment through the financing of 50 start-ups in the agriculture and non-agriculture sectors led by these target groups.
“The private sector has a key role to play in accelerating financial inclusion,” said Lotfi Kourdali, the Trade Hub’s Public-Private Partnership Director. “This partnership with Locafrique reinforces our key objectives in Senegal by providing grants for projects that boost economic growth and ensure that women and youth have access to the financing needed to grow their businesses and be key drivers of change in the country.”
The Trade Hub/Locafrique partnership builds on a host of USAID-funded initiatives, including the Feed the Future Senegal Nafoore Warsaaji (“Gardens of Abundance” in pulaar) Activity that employs market-based approaches to link Senegalese vegetable and fruit farmers with market information and proven technologies. Similarly, the USAID Entrepreneurship and Investment Project, which will be officially launched in the coming weeks, will facilitate access to business development services that will increase sustainable economic opportunities for young people and women founders of startups, entrepreneurs, and established businesses, in order to increase investment and create jobs with a positive social impact.