AfDB seeks $135bn additional lending for Africa’s MSMEs

By Yinka Kolawole, with agency report

THE African Development Bank (AfDB) said that financial markets in Africa need to increase their lending to Micro, Small and Medium enterprises (MSMEs) in the continent by at least $135 billion in order to meet their demand.

In a statement to mark the United Nations’ (UN) MSMEs Day, AfDB noted that MSMEs in Africa need increased affordable loans and more diverse and innovative financing instruments to enable them grow. According to the UN, MSMEs represent around 90 percent of global economic activity, and are on the front line of embracing transformative technologies and new business models.

In the statement, AfDB noted that firms with fewer than 20 employees and less than five years experience provide the most jobs in Africa’s formal sector. The bank said it supported 156,000 owners and operators of MSMEs in Africa in 2016 by providing them with financial services to start and grow their businesses. AfDB called for a holistic policy approach to strengthen entrepreneurship to facilitate Africa’s industrialisation and tackle the myriad of financial constraints facing small-scale businesses in the continent.

“The first is improving skills of entrepreneurs and of workers in general and aligning them with labour market needs. While governments can promote learning, engaging the private sector is necessary. The second policy area relates to grouping firms in business clusters, such as industrial parks and special economic zones.

Business clusters

Clustering can support start-ups and increase existing firms’ productivity and growth, assuming adequate infrastructure is available,” it noted.

Meanwhile, the statement quoted President of AfDB, Dr. Akinwumi Adesina, as saying that entrepreneurial culture is vibrant in Africa, adding that the continent has the highest share in the world of adults starting or running new businesses, but often in sectors where productivity remains low.

“The entrepreneurial culture is vibrant, with about 80 per cent of Africans viewing entrepreneurship as a good career opportunity. New industrialisation strategies should focus on leveraging this dynamism and targeting the continent’s fast-growing private enterprises which have potential to create quality jobs. Given Africa’s potential for increased involvement in this sector, AfDB is also increasing its efforts to promote access to finance for entrepreneurs to create start-ups and expand existing businesses,” he stated.

Adesina said AfDB is launching some new programmes that are designed to help Africa to attain its industrialisation goals. He further said that the bank was also collaborating with the European Investment Bank and the European Commission to help create and grow 1,500 innovative businesses, while creating 25,000 direct jobs and 100,000 indirect jobs. He said that the collaboration is expected to also improve environmental, social and management practices in youth-owned SMEs across Africa.

 

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