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PME en Afrique
During this critical period, a number of financial players – PROPARCO’s partners – are taking action to support African SMEs, which are (already) facing major cashflow problems.

In the wake of Covid-19, a devastating economic crisis is threatening all the countries affected. Indeed, the decisions made to limit the spread of the virus have a serious impact on local economies. On the front line: the developing world where the entrepreneurial fabric, which is mainly made up of small and medium-sized enterprises (SMEs), has been hard hit by the effects of the health measures and the halt of many local business activities. In Africa, entire sectors of the economy are currently shut down and SMEs (which alone account for 60% of formal employment) are facing major cashflow problems. 

In many African countries, the public authorities already foresee a major decline in economic activity, with growth forecasts halved. “This situation is also anticipated by the International Monetary Fund (IMF), which forecasts the first recession in Sub-Saharan Africa in 25 years”, reports Financial Afrik

Indeed, in the Regional Economic Outlook for Sub-Saharan Africa, entitled, “COVID-19: An Unprecedented Threat to Development”, which was released in mid-April, the IMF forecasts a recession of 1.6% in Sub-Saharan Africa this year compared to a growth rate of 3.1% last year. It also warns that: “[The region] is facing an unprecedented health and economic crisis. One that threatens to throw the region off its stride, reversing the development progress of recent years”. The World Bank confirms this decline, considering at the same time that “Growth in Sub-Saharan Africa has been significantly impacted by the ongoing coronavirus outbreak and is forecast to fall sharply from 2.4% in 2019 to -2.1 to -5.1% in 2020”.

Supporting local financial systems 

It is therefore crucial to support African economic players, especially SMEs, which are essential for employment and post-crisis recovery. A number of financial players are providing this support – banks, investment funds, microfinance networks and institutions (MFIs) – which PROPARCO is financing under the Choose Africa initiative. This initiative aims to earmark EUR 2.5bn – via the tools of Agence Française de Développement (AFD) Group – to finance African start-ups and SMEs for the period 2018-2022.

In South Africa, FirstRand Bank has launched the SPIRE (SA Pandemic Intervention and Relief Effort) initiative to support Government and its partners in the fight against Covid-19. The objective of this financial tool is to support the medical companies responsible for providing testing and producing front-line protective tools. In 2018, PROPARCO allocated a USD 50m senior credit line to FirstRand Bank to finance its SME portfolio, as well as a USD 50m loan in 2019 to support the bank's development in “the agriculture transformation”.

Local financial systems also aim to facilitate access to credit for their clients in difficulty or suspend their repayment maturities. This is the case with Atlantic Business International (ABI) Group, which is based in Abidjan and supported by PROPARCO. It is offering the companies affected a deferment of their loan maturities, as well as the main mobile banking services free of charge. In addition, at the outset of the pandemic, ABI made various donations to different ministries and solidarity funds to help cushion the health shock. In Botswana, African Banking Corporation Botswana (BancABC) – a new partner of PROPARCO – has implemented measures for companies affected by the pandemic (3-month moratorium on loan repayments, 25% reduction in online transaction fees, etc.).

In Nigeria, Union Bank of Nigeria, which is specialized in SME lending, has contributed NGN 250m (~EUR 600k) to the NGN 120bn (~EUR 300m) fund planned by this coalition to support the local economic fabric. In Côte d’Ivoire, the MFI Advans, which operates in 9 African countries, is promoting digital transfer systems demanded by small businesses.

Ad hoc “SOS Covid” course at SIBC 2020

This year, the Social and Inclusive Business Camp (SIBC), a program devised and incubated by AFD’s Development Campus and managed by I&P Conseil and its partners (African Management Institute, ScaleChanger and StartupBRICS), is working with entrepreneurs operating in Africa to address the Covid-19 crisis. To strengthen their capacity for growth and resilience to this unprecedented economic and health crisis, for its 4th edition, SIBC is offering all the program’s candidates an ad hoc “SOS Covid” course available in English and French. Each entrepreneur that validates their application will have free access (market value of EUR 7,500) to a crisis business management kit developed with African Management Institute. They will be able to exchange during a collaborative webinar, access management tools on the AMI platform for 2 months, and thereby join a community of qualified peers to accompany them during this uncertain period.