Credit Guarantee Schemes: Facilitating MSME Financing in Africa During the COVID-19 Pandemic
Credit guarantee schemes (CGSs) are an important form of government policy response that can small businesses grow while also reaching excluded and vulnerable groups.
CGSs act as guarantors and share potential credit risks to incentivize lending institutions to address financing challenges faced by micro, small and medium enterprises (MSMEs). Unlike in other regions where CGSs were a favored initiative to alleviate financing constraints by MSMEs during the COVID-19 pandemic, only a small fraction of countries in Sub-Saharan Africa (SSA) adopted it as a response strategy.
This report highlights the role of CGSs in the SSA region and how it helped improve MSME financing during the COVID-19 pandemic, which can be considered for future crisis responses for others.