At a Glance
- $1.3 billion Impact+ Facility aims to unlock more credit for Africa’s small businesses.
- Guarantees cover up to 80% of SME loans to ease bank lending risks.
- Initiative targets women, youth, and rural entrepreneurs across African economies.
The European Union has joined forces with Proparco to launch the $1.3 billion Impact+ Facility to expand credit access for Africa’s small and medium-sized businesses, a vital step in closing the continent’s $330 billion SME finance gap.
Announced at the Africa Financial Industry Summit in Casablanca, the program aims to strengthen Africa SME finance by sharing lending risk with local banks, helping them offer more flexible and longer-term loans to entrepreneurs.
The Impact+ Facility combines a €178 million (4205.82 million) EU counter-guarantee under the EFSD+ program with additional backing from African financial institutions. Over the next five years, it aims to unlock about €1.1 billion ($1.3 billion) in guarantees to help lenders finance more small businesses across the region.
By sharing credit risk, the facility seeks to address a long-standing hurdle in African markets: banks’ reluctance to lend to smaller firms without heavy collateral. That caution has left many entrepreneurs unable to secure the capital needed to expand operations or hire workers.
Focusing on Africa’s economic backbone
Small and medium-sized enterprises generate up to 90 percent of jobs across Africa and are critical in sectors such as agriculture, retail, healthcare, education, manufacturing and renewable energy. Yet the International Finance Corporation estimates that the continent’s SME funding shortfall exceeds $330 billion each year, a gap that limits productivity and innovation.
Impact+ will prioritize sectors central to local economies and target underserved groups, including women- and youth-led firms, rural entrepreneurs and businesses in refugee-hosting communities.
Loans covered under the program will range from €500 ($578.16) to €2 million ($2.31 million), with guarantees covering up to 80 per of principal and interest for periods between six months and 10 years, terms designed to give banks confidence to lend more and longer.
Building on proven development models
The initiative builds on the success of Euriz, a previous EU-backed guarantee program that helped lenders operate more confidently in higher-risk environments.
“Impact+ takes this approach to a larger scale,” said Djalal Khimdjee, Deputy CEO of Proparco. “When we share risk with local lenders, they can extend credit to businesses ready to grow, even in difficult conditions.”
For Europe, the project aligns with its Global Gateway strategy, which emphasizes mobilizing private investment and strengthening commercial partnerships rather than relying on traditional aid.
“This facility shows what smart risk-sharing can achieve,” said Fulvio Capurso, Head of Unit at the European Commission. “Financing African SMEs is not charity, it’s a sound investment in future markets, jobs and innovation.”
Helping banks lend smarter
Beyond guarantees, Impact+ includes technical assistance to strengthen how banks evaluate credit risk, improve SME lending systems and expand climate-finance capacity. It will also promote local-currency solutions to protect borrowers from exchange-rate volatility that often disrupts repayment.
With more than 150 partner institutions across 50 countries, Proparco says the new facility is designed to help lenders navigate inflation, currency depreciation and climate-related challenges.
A turning point for African finance?
The launch comes as investors tread cautiously and central banks tighten policy to curb inflation. In this environment, blended-finance tools that mix development capital with private investment are gaining attention.
If successful, Impact+ could mark a shift in how Africa finances its growth, from donor-driven models toward risk-sharing partnerships that attract private capital. For the entrepreneurs driving local economies, it promises something long overdue: fair, timely and flexible access to the funds that fuel progress.
