Sunday , October 2 2022

$ 331 billion to support African SMEs


The situation of small and medium-sized enterprises in Africa, which is very important for the economies of the continent, is worrying. Their funding needs are $ 331 billion. Needs that make a real obstacle to their development, and thus to the economic development of the countries of the continent.

"In Africa, there are 44 million formal SMEs, accounting for 33% of the continent's gross domestic product and 45% of jobs. However, 70% do not have long-term financing, and 80% do not have access to bank loans", Said Thameur Hemden, Co-Chairperson for African and Mediterranean Participatory Financing (FPAM) speaking at the Forum crovdfunding in Africa in the capital of Senegal, Dakar, this week. "Their funding needs are $ 331 billion. The financial gap represents the first obstacle to the development of African SMEsHe added.

Hemand's concern is shared by Laurent Gonnet, chief financial sector specialist at the World Bank (VB), who, referring to the Strategic Markets Initiative (SMI Forum), suggested that there is a $ 10 billion deficit in financing for formal SMEs in West Africa. "For Senegal, it's a billion dollars. Therefore, the World Bank and other partners must establish all the conditions for this gap to be resolved between 5 and 10 yearsThe World Bank expert continued.

crovdfunding, a credible alternative, or insufficient

To overcome this gap, several actors are turning aroundcrovdfunding). But the African Development Bank (AfDB) believes that, although it means reliable, this is not enough. "In 2017, the total amount of funding in Africa was $ 153 million. The system is not yet fully secureSaid Valerie Dabadi, Head of Resource Mobilization and External Financing at AfDB.

Laurent Gonnet proposes a three-leveraged solution. "The first is competition in the financial sector, because if it does not exist, the interested parties will not go to SMEs. The second leverage is a credit infrastructure that destroys the symmetry of information between the banker and his client. The third is a need for public intervention with the central bank, the Ministry of Finance or other public forcesHe explained the financier. For Gonnet, "often the banker seeks the building, the house, the land as a guarantee without which there is no funding. This does not help young companies; Financing will finally go to those who already have wealth"Laurent Gonnet invited decision-makers to develop"imperative»«extended collateral regime in which other types of collateral will be offered to the bankers".

You must do "slipping banks by understanding that funding for SMEs can make moneyAdded by Gonnet. Too,Ministry of Finance [doivent] Establish guarantee funds that provide banks with an additional level of comfort that allows them to finance a little more SMEs"Argues Gonnet, Senior Financial Sector Expert at the World Bank.

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