Project detail - AFG Bank Cameroun

Who is our prospective customer?

AFG Bank Cameroon (“AFG CM”, or “the Bank”) is a privately owned universal bank operating in Cameroon and a core subsidiary of AFG Holding, a regional financial services group headquartered in Côte d’Ivoire with activities across Africa. In Cameroon, AFG CM operates a nationwide branch network, serving individual customers, micro, small and medium sized enterprises (MSMEs), corporates and institutional clients, with a growing focus on MSME and corporate lending.

What is our funding objective?

FMO has approved a EUR 30mln senior loan to AFG CM. The facility is part of a syndication co-led by FMO and another European development finance institution, for a total amount of up to EUR 65 million. The objective of the financing is to provide AFG CM with long-term funding to support the expansion of lending to the private sector, with a particular focus on MSME lending. The loan will strengthen the Bank’s funding profile and will enable it to increase the availability of longer tenor financing for underserved private sector clients. By supporting the growth of MSME and private sector lending, the facility is intended to contribute to job creation, value chain development and inclusive economic growth in Cameroon. This financing is made with support from the European Union and the European Fund for Sustainable Development Plus (EFSD+), one of the financing tools of Global Gateway, promoting sustainable investments in the EU’s partner countries. FMO has utilized an EFSD+ guarantee under the MSME Platform program, which supports investments into micro, small and medium-sized enterprises with a particular focus on businesses run by women, young people and migrants, active in Least Developed Countries, low income countries, and countries in a fragile or vulnerable situation. MSME Platform is a joint initiative managed by EDFI Management Company SA.

Why do we want to fund this investment?

FMO’s investment aims to provide long-term funding to AFG Bank Cameroon operating in a Fragile and Conflict-Affected State (FCS), where access to stable, longer-tenor financing remains limited. Through its anchoring role in this syndicated facility alongside other European development finance institutions, FMO supports the Bank in strengthening its funding profile and sustaining prudent growth in a challenging operating environment. FMO’s role is additional through the provision of long-term, development-oriented financing that is not readily available from commercial sources in Cameroon. In line with FMO’s Reducing Inequalities (“RI”) strategy, the investment qualifies for a 100% RI label.

What is the Environmental and Social categorization rationale?

AFG Bank Cameroon has been classified as FI-A due to its substantial exposure to high-risk sectors, which collectively represent more than 20% of its total portfolio. These sectors include construction (21%), primarily involving large infrastructure, civil works, and road development projects; industrial manufacturing, particularly steel production (5%); and electricity and gas production and distribution (7.3%). Notably, AFG Bank also invests in public administration activities, mainly State-Owned Enterprises which constitute 32.6% of the loan book, these are often linked to large infrastructure and energy projects that amplify governance and compliance challenges. Cameroon’s broader operating environment is characterized by some fragilities as the country continues to grapple with two major crises that significantly undermine national stability. These challenges compounded by governance structures to be improved and human rights concerns create a highly complex context for financial institutions. Within this environment, banks face heightened difficulty in effectively identifying, assessing, and managing Environmental & Social (E&S) risks across their portfolios. AFG Bank Cameroon currently rely on the Environmental and Social Management System (ESMS) put in place by its group AFG Holding and required some local improvement to better manage the E&S risk exposure. The bank therefore requires a comprehensive capacity-building approach, including the development and implementation of an ESMS, the establishment of reinforced E&S policies, and the adoption and operationalization of the FMO Exclusion List. The Envronmental and Social Action Plan includes measures to mitigate these risks as well as extensive training for the E&S, credit and risk departments to ensure that E&S considerations are properly integrated into core banking operations. The Bank’s management has committed to implementing these measures in close coordination with FMO and other lenders.