The State and the Professional Association of Banks and Financial Institutions of Senegal (Apbefs) signed on 29 April a framework agreement, relating to the establishment of a 200 financing mechanism billion CFA francs to support companies affected by the Covid-19 pandemic.

The State has found a financing mechanism of 200 billion CFA francs to support companies affected by the Covid-19 pandemic. It signed a framework agreement on 29 April with the Professional Association of Banks and Financial Institutions of Senegal (Apbefs), represented by its President Mamadou Bocar Sy. Indeed, eligibility criteria have been set to benefit from it. From the outset, the company must undertake to maintain its employees and their salaries or pay them at least 70% of the net salary in the event of technical unemployment, to repay this loan in full, among other conditions. The company must first be registered in the Trade and Movable Credit Register (Rccm) before February 29, 2020, have at least 5 employees in Indeterminate Term Contract (Cdi) or Fixed Term Contract (Cdd) on February 29, 2020. It must also prove that it has lost at least 33% of its turnover due to the Covid-19 pandemic, but also prove that it does not benefit from State assistance in funds such as this financing, that it has not had a downgraded credit during the last 12 months preceding the date of the 29th February 2020.
This financing of 200 billion CFA francs will be in the form of cash loans or investment credits. So, it was agreed between the two parties to set up two windows of 100 billion CFA francs each, namely one for Small and Medium Enterprises (SMEs) and another for Large Enterprises (Ge). For SMEs, the State and its partners will make available to banks, in the form of unpaid cash deposits, an envelope of 50 billion CFA francs. These deposits, which will be pledged to the banks participating in the financing mechanism, will also serve as collateral, the framework agreement specifies. 'In the event of a favourable decision on the applications submitted to them, the banks undertake to inject twice the amount deposited, in the form of loans to the SMEs concerned, protected from the amounts deposited as collateral. Thus, the State guarantee quota for this tranche dedicated to SMEs will be 50% of unpaid invoices. For the purposes of this framework agreement, SME means any company whose annual turnover is between 100 million and 2 billion CFA francs," the document reads. And for the window dedicated to large companies, according to the document, an envelope of 20 billion CFA francs in the form of unremunerated deposits will be placed by the State with banks to serve as a guarantee. "In the event of a favourable decision on the applications submitted to it, the banks undertake to grant 100 billion CFA francs in loans to the large companies concerned, protected from the amounts deposited. The State guarantee quota will be 20% of unpaid invoices for this category of companies. For the purposes of this framework agreement, Ge means any company whose annual turnover exceeds 2 billion CFA francs", agreed the State, represented by the Minister of the Economy, Planning and Cooperation, Amadou Hott, and his partners.
Thus, to allow banks to grant loans under the conditions of the framework agreement, a specific refinancing mechanism at the rate of 2.5% per year at most, with a minimum maturity of 3 months, will be requested from the Central Bank of West African States (Bceao). Loans granted by banks must be at lower costs compared to those on the market, in terms of exit rates and maturity.
And as for the Very Small Enterprise (Tpe) with a turnover of less than 100 million CFA francs and domiciled in a bank or a decentralized Financial System (SFD) of the place, it will be covered by another mechanism managed by the Guarantee Fund for Priority Investments (Fongip). The role of the State will be among many others to take fiscal measures such as exemption from the tax on financial activities, registration fees for acts related to the framework agreement or the assistance to be set up. The framework agreement is valid for 3 months, from this month, and it is renewable by tacit renewal.