The Central African Republic (CAR) is set to launch a critical financial mechanism designed to unlock credit for its local economy: the National Guarantee Fund. Announced by Finance Minister Herve Ndoba during a meeting with the World Bank resident representative Guido Rurangwa, the fund is a strategic intervention aimed at tackling the nation’s severe constraints on access to finance.
The fund will operate with a substantial share capital of 10 billion CFA francs (approximately $17.7 million), with 3 billion CFA francs provided by the World Bank.
Bridging the Collateral Gap
The core mandate of the National Guarantee Fund is to support Small and Medium-sized Enterprises (SMEs), which currently struggle to obtain bank financing due to a critical lack of adequate collateral. By sharing a portion of the risk taken by banks when extending loans, the fund will significantly ease the financial burden on lenders.
This mechanism makes it feasible for banks to finance firms that otherwise lack the traditional assets required for credit, thus stimulating investment and growth in the formal sector.
The Urgent Need for Financial Inclusion
The launch of the fund is critical given the country’s severely limited financial access. According to Felix Landry Njoume, President of the CAR’s Professional Association of Credit Institutions:
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Banking Penetration Rate: The rate remains exceptionally low at just 7%.
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Informal Economy: A staggering 70% of the population operates within the informal sector.
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SME Access: Only 22% of SMEs currently obtain formal bank financing.
The Guarantee Fund is a targeted solution to formalize and empower these enterprises, laying a foundation for broader economic resilience by extending financial services to a majority of the population currently excluded from the formal banking system.
