Issue 1 - SME financing in Sub-Saharan Africa

Issue 1 - SME financing in Sub-Saharan Africa

May 2009

Editorial

Par Luc Rigouzzo , Chief Executive Officer of Proparco

We are very pleased to share this first issue of Private Sector and Development with you. This bimonthly magazine aims to compare the opinions of Proparco’s community of investors with those of academic experts and members of civil society on the role the private sector plays in the development of South countries.

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Rethinking finance for Africa's small firms

African banks had just started to show interest in SMEs when the global crisis reversed the tide. The risk for SMEs is that they will suddenly be barred access to credit whereas they need long-term financing more than ever before and Africa’s financial systems are unable to meet this demand >> Download Paul Collier's paper

Private equity investment in Sub-Saharan African SMEs

SME financing cannot be enhanced simply by scaling up volumes of financing. SMEs need to upgrade so that they can meet the eligibility criteria of bankers and other investors. I&P is aware of the difficulties met by promoters and can - subject to certain conditions - provide equity and loan products as well as technical assistance >> Download Patrice Hoppenot's paper

The difficulties banks face in financing SMEs in Sub-saharan: who is to blame ?

Firms and banks alike would seem to be responsible for the lack of SME financing in SSA: firms because of their shortfalls in meeting the classic requirements of the banking sector and banks because they could mobilize more resources in order to penetrate the SME segment. BOA’s experience has shown that this client base could provide an interesting outlet for banks, provided they tailor their operating methods to the specificities of SMEs >> Download Paul Derreumaux's paper

Financing SMEs in a context of strong information asymmetry

The acuteness of information asymmetries between bankers and entrepreneurs,  which cannot be offset by adequate loan securitization, constitutes one of the  main stumbling blocks to SME financing in SSA. The gap between banks and  SMEs can, however, be narrowed by developing financial systems that are more  adapted to local contexts >> Download Julien Lefilleur's paper

Credit to the private sector in Sub-Saharan Africa: Developments and issues

Despite signs of progress, SSA is still lagging compared to other regions when it comes to scaling up the volume of loans allocated to the private sector. If it is to catch up, some progress needs to be made in areas such as information  dissemination, the appropriateness of bank products, the regulatory environment and loan securitization >> Download Emilio Sacerdoti's paper

Bank financing to SMEs: what are Africa's specifities?

Using bank survey data, this article compares the scale and type of bank lending to SMEs in Africa to that available outside the region. The data shows that bank financing to SMEs in Africa is less significant, more short-term, and more expensive than in other developing countries >> Download Maria Soledad Martinez Peria's paper

A perspective on SME financing in Africa

SMEs may account for the bulk of firms and employment in SSA, yet they  contribute very little to GDP. This is partly due to the financing constraints they meet. However, these firms have considerable socio-economic impacts and it is  therefore essential to support their development. In order to do so, bankers and other donors must call on the support of intermediaries that have extensive knowledge of this segment and they must also provide technical assistance in addition to their financing >> Download Admassu Tadesse's paper