Monday , October 3 2022

Funding: $ 331 billion to support small and medium-sized companies in Africa


The situation of small and medium enterprises in Africa, which are very important to the economies of the countries of the continent, is worrisome. Their financing needs are $ 331 billion. Which constitute a real obstacle to their development and, therefore, to the economic development of the countries of the continent.

"In Africa, there are 44 million small and medium-sized businesses, which account for 33% of the continent's GDP and 45% of jobs. However, 70% of them do not have long-term financing and 80% do not have access to bank credit"Said Thameur Hemdane, Co-Chair of Participatory Financing for Africa and the Mediterranean (FPAM) speaking on the Forum du Crowdfunding In Africa in the Senegalese capital, Dakar, this week. "Their financing needs are $ 331 billion. The financing gap is the first obstacle to the development of small and medium-sized companies in AfricaHe added.

Hamdane's concerns are shared by Laurent Gunt, an expert in the World Bank's main financial sector (WB), who, citing the Strategic Market Initiative (SMI Forum), suggested that West Africa would have a $ 10 billion deficit to finance formal SMEs. "For Senegal, this is a billion dollars. Thus, the World Bank and other partners must put all conditions for this gap between 5 and 10 yearsContinued expert World Bank.

Crowdfunding, A reliable alternative, but not enough

To overcome this gap, some players turn to crowd funding (Crowdfunding). But the African Development Bank (AfDB) finds that while this means reliable, it is not enough. "In 2017, total financial expenses in Africa was $ 153 million. The system is still not fully securedSaid Valery Dabady, head of fundraising and external funding at AFDB.

Laurent Gunt offers a solution based on three levers. "The first is competition within the financial sector, because if it does not exist, stakeholders will not go to small and medium-sized companies. The second lever is the credit infrastructure that eliminates 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 forcesExplained the financier. For Gont, "Often the banker seeks a building, a house, a land as a guarantee without which there is no funding. It does not help young companies; The funding will finally go to those who already have wealth"Laurent Gunt calls on decision-makers to develop"categorically»WonderfulAn expanded collateral regime in which other types of collateral will be offered to bankers"He said.

You have to do «Mucus banks by making them understand that SME financing can make moneyAdded Gaunt. also,Ministry of Finance [doivent] Put in place a guarantee funds that offer banks an additional level of convenience that allows them to finance small and medium-sized companies a little more", Argues Gonnet, senior specialist in the financial sector at the World Bank.

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