3. The Credit Guarantee Landscape
3.2. The offering of credit guarantees in the countries studied Previous studies have employed a range of approaches to
Therefore, we use a descriptive framework that consists of
Molennar, 2004; Navajas, 2001; Beck et al., 2008), but
financial terms. The figure below shows the major compo-
sively describe the landscape of guarantee schemes
be distinguished by its component features in each of the
categorize credit guarantee schemes (Deelen and
three basic dimensions: (1) targets; (2) processes; and (3)
these are limited in their ability to simply and comprehen-
nents that make up the three dimensions. A given CGS can
observed in Ghana, Kenya, South Africa and Tanzania.
three dimensions.
Figure 16: A descriptive framework for assessing the offering of credit guarantees
Targets Guarantee model • Individual • Portfolio • Institution
Borrower type • Size • Sector • Geography
Loan characteristics • Size • Type • Maturity • Interest rates/terms
Processes Initiation
Financial terms Risk sharing
• Eligibility • Customization
Utilization & reporting
• Ex ante/ex poste • Opt-in/automatic • Monitoring and evaluation
Claims
• Pre-requisites • Timing of repayment
Capacity Building
• Coverage (%) • Type (first loss, pari passu, second loss, etc)
Fees
• Origination • Utilization • Renewal
Funding
• Funded/unfunded • Location of funds
• Bank • SME
Source : Dalberg Analysis
We have used this framework to identify correlated features
some of the distinguishing features of the different guaran-
for any given guarantee model, to analyze the current
tee models.
offerings pertaining to guarantees, and to characterize the
Individual loan guarantees
provider landscape.
Individual guarantees that we observed usually involve the
3.2.1. Features of major guarantee models
CGS provider in the assessment of loans, often – although
There is a strong correlation between specific guarantee
tial process for a bank to become eligible to use the guar-
not always – after a referral by the bank (ex post). The ini-
features across the various dimensions. In particular, the
antee is usually shorter, but the loan approval (utilization)
guarantee model is often linked with certain initiation and
process takes longer because of duplication in the assess-
utilization processes and fee structures, and to a lesser
ment (by both the bank and the CGS provider). Additional
extent with risk-sharing approaches. Below, we describe
reporting requirements are usually reduced. Both guaran-
© AFD Working Paper 123 • Assessing Credit Guarantee Schemes for SME Finance in Africa • April 2012 33