Tuesday , October 4 2022

Funding: $ 331 billion to support African SMEs


The situation of small and medium-sized businesses in Africa, which are very important for the economies of the countries of the continent, is worrying. Their financing needs amount to $ 331 billion. Needs that are a real obstacle to their development and hence to the economic development of the Continental States.

"In Africa, there are 44 million official SMEs accounting for 33% of the continent's gross domestic product and 45% of jobs. However, 70% do not have long-term funding and 80% do not have access to bank credit"Said Thameur Hemdane, co-chair of FPAM, who spoke at Forum du crowdfunding in Africa in the capital of Senegal, Dakar, this week. "Their financing needs amount to $ 331 billion. The funding gap is the first barrier to the development of African SMEsHe added.

Hemdane's concerns are shared by Laurent Gonnet, head of the World Bank Specialist in Finance (WB), who, referring to the SMI Forum, suggested that there would be a $ 10 billion deficiency in West Africa for financing of formal SMEs. "For Senegal, it is a billion dollars. Therefore, the World Bank and other partners must put in place all the conditions for resolving this gap between 5 and 10 yearsThe World Bank expert continued.

crowdfunding, a reliable alternative but insufficient

To overcome this void, several factors turn to crowdfunding (crowdfunding). But the African Development Bank (AfDB) finds that although it means reliable, it is not enough. "In 2017, the total amount crowdfunding in Africa was $ 153 million. The system is not yet completely safeValérie Dabady, head of the fund mobilization and external finance department at AfDB, said.

Laurent Gonnet proposes a solution based on three levers. "The first is competition in the financial sector, because if it does not exist, the parties will not go to the media. The second lever is the credit infrastructure that ousts the symmetry of information between the banker and his client. The third is the need for public intervention with the central bank, the Ministry of Finance or other public powersThe financier explained. For Gonnet, "often the banker asks for a building, a home, a land as a guarantee without which there is no funding. This does not help new businesses. the funding will eventually reach those who already have wealth". Laurent Gonnet calls on decision-makers to develop "urgently»«an expanded collateral scheme, which will offer other types of collateral to bankers".

You have to do "salvaging the banks, making them understand that SME financing can make moneyGonnet was added. Also,Ministries of Finance [doivent] create guarantee funds that offer banks an additional level of comfort that allows them to finance SMEs a little more", Argues Gonnet, senior World Bank financial expert.

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