Private Sector & Development magazine articles

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Decoding

The difficulties bank face in financing SMEs in Sub-Saharan Africa

Paul Derreumaux AfDB
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.
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Decoding

A perspective on SME Financing in Africa

Admassu Tadesse DBSA
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.
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Decoding

Financing SMEs in a context of strong information asymmetry

Julien Lefilleur Proparco
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. In addition, by promoting sustainable guarantee funds, banks would be able to share their risks.
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Decoding

Credit to the Private Sector in Sub-Saharan Africa: Developments and Issues

Emilio Sacerdoti Multilateral Investment Fund (MIF)
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. The last aspect is essential for SME lending activities, as the latter generally cannot provide sound guarantees.
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Decoding

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

Maria Soledad Martinez Peria The World Bank Group
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.
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