SME Finance in Africa: What's New?
published on 23 September 2019
10 years after having dedicated its first issue to the financing and support of SMEs in Africa, Proparco's Private Sector & Development magazine takes another in-depth look into this major challenge for the continent's development. Micro, small and medium-sized enterprises (MSMEs) represent indeed 90% of the entrepreneurial fabric and 60% of jobs on a continental scale.
Despite being one of the key pillars of the continent's economy, African MSMEs are struggling to find the capital they need to grow. They face many obstacles preventing them from accessing funding and thus from fully deploying their potential. Women's businesses are particularly affected, as only 10% of them have access to the financial services they need to develop their projects.
Difficulties in raising capital arise on both the supply and demand side. African MSMEs are perceived by credit institutions as risky structures: not very resilient, fragile in terms of activity, solvency and management. Nor do microfinance institutions and commercial banks take into account the specific needs of these companies. Financial institutions often fail to adapt their financial products and to increase the simplicity and clarity of lending conditions.
This new issue of the Private Sector & Development magazine gives the floor to experts (fund managers, economists, entrepreneurs...) who provide a precise overview of the situation on a continental scale, recall the role of financial regulators and analyse the causes of default of African MSMEs. This 10-year anniversary issue also explores new digital solutions driven by innovative fintechs and highlights the positive impact of some initiatives, such as mentoring entrepreneurs, in the development of African SMEs. It also deciphers the strategy of several financial institutions that promote access to financing for these companies.
The crucial issue of support for African MSMEs is at the heart of the Choose Africa initiative, launched in 2019 by France. This initiative aims to dedicate 2.5 billion euros - via AFD Group tools - to accelerating the growth of 10,000 start-ups and MSMEs on the continent.
