• Fund backed by World Bank aims to ease SME access to bank credit

• Only 22% of SMEs secure loans; banking access remains limited at 7%

The Central African Republic will soon launch its national guarantee fund, Finance Minister Herve Ndoba said on Thursday.

Ndoba announced the initiative during a meeting with World Bank resident representative Guido Rurangwa. The fund will have share capital of 10 billion CFA francs ($17.7 million), including 3 billion provided by the World Bank.

The mechanism aims to support local businesses by sharing part of the risk taken by banks when they extend loans.

It is designed to address a longstanding obstacle: small and medium-sized enterprises struggle to obtain bank financing because they lack adequate collateral. By partially guaranteeing loans, the fund will make it easier for banks to finance firms that do not have the assets normally required for credit. The launch comes at a time when access to financial services remains limited in the CAR.

According to Felix Landry Njoume, president of the Central African Republic's Professional Association of Credit Institutions and managing director of Ecobank Centrafrique, the country’s banking penetration rate is 7%. He said 70% of the population works in the informal sector, and only 22% of SMEs obtain formal bank financing.

Chamberline Moko