SMEs : adopting an innovative and collaborative approach
While it is now recognized that African SMEs, which make up 90% of the economic fabric of African countries, are the key to wealth and job creation and thereby to the continent's development, the financing gap for SMEs in Africa is estimated at $300 billion. Mechanisms dedicated to African SMEs do exist and are multiplying. Given the urgent social need, the challenge is to scale them up. This requires a collaborative approach between the various actors involved. This is the message of the Africa SME Champions Forum over the last ten years.
By Dounia Ben Mohamed, in Lomé
90% of the African economy is made up of small and medium-sized enterprises. In other words, SMEs are responsible for creating wealth and jobs. And yet, despite being at the center of all the speeches, they remain the great forgotten of public policies. At a time when the financing gap for SMEs is estimated at 300 billion dollars, and in a context of high social tensions, consolidating the growth of African SMEs is a matter of urgency.
This is the challenge taken up by the Africa SME Champions Forum, which has been running for ten years, bringing together the key players in the SME world, public officials, financial players and the SMEs themselves to solve this equation. « SMEs are the heart and lungs of our economies, » says Didier Acouetey. The Africa SME Champions Forum, launched in 2014, aims to change that. Since its launch, we’ve seen the results. We carry out a survey after each edition. They are managing to grow and create jobs. Proof that the format works.
In the face of health, climate, security and economic crises, our African economies have shown resilience, thanks to SMEs, which make up 95% of the economic fabric
And for the 8th edition, Lomé is hosting the event after Nairobi, Dakar and Kampala. This confirms the positioning of the Togolese capital as a financial center, as the Prime Minister, Victoire Tomegah Dogbé, pointed out. Before recalling the urgency with which this edition is being held. « Without jobs, the survival of all of us is threatened, the stability of our countries is threatened. We must be aware of the urgency of our actions, » the Minister said, before acknowledging that « in the face of health, climate, security and economic crises, our African economies have shown resilience thanks to SMEs, which make up 95% of the economic fabric ». The Minister went on to describe the initiatives being taken in Togo to meet this challenge. « Reforms are underway in Togo. They have led to the growth of our SMEs, in all sectors. Our start-ups raised $6 million last year. But when we talk to young entrepreneurs, we find that there is a glass ceiling. Our SMEs are often born, grow, but find it difficult to scale up because of a number of factors, including governance, human resources and financing. We often admire the big global players in agriculture, industry, logistics or digital services. But we must remember that these multinationals were once SMEs. In Africa, we have the potential to do just as well, if not better. There is a whole ecosystem that needs to be rethought around African SMEs. At every stage of a company’s growth. Because needs change at every stage. We need to work together, otherwise our conferences will be in vain ».
BADEA reaffirms its commitment to SMEs: CFAF 10 billion to support SMEs
This is precisely the message of the Africa SME Champions Forum: to bring together the entire ecosystem concerned to find collective solutions and promote partnerships. This is in line with the work of the Arab Bank for Economic Development in Africa (BADEA), one of the Forum’s main partners, which has reaffirmed its commitment to African SMEs at this 8th edition of the Forum. This is reflected in the signing of a 10 billion FCFA agreement with the Togolese government to support SMEs. This package is also accompanied by a second financial package of FCFA 200 million « for technical assistance to SMEs ».
This 8th edition is an important milestone in the coalition in favour of SMEs launched by BADEA and its partnerships, with the idea of bringing together around the same table all the institutions interested in SMEs, » said BADEA’s President, Sidi Ould Tah. Within the UEMOA region, SMEs account for 95% of all registered businesses, and are recognized as major players in the achievement of development objectives, in their capacity to create jobs and reduce poverty ». This explains the attention paid to SMEs, at the heart of development strategies, with some countries even creating ministries dedicated to VSE/SMEs. Just as they are at the heart of the bank’s strategy, supported through various instruments, including lines of credit. « BADEA continues to advocate for a coalition in favor of African VSEs and SMEs, so that all stakeholders can join efforts through a holistic approach and solve the various problems faced by SMEs ».
We need to think about new mechanisms. One of these being digitalization and AI to make rapid decisions in favor of SMEs
What seems to be the key to the solution, and the approach advocated by the Africa SME Champions Forum, is to encourage partnerships between the various players involved. « We need to work together » says BOAD President. We need this type of partnership to pool our strengths and meet the needs of our SMEs », urged Serge Ekue, President of BOAD, which is celebrating its fiftieth anniversary and has, in recent years, deployed 400 billion in favor of SMEs. « One of the big problems facing SMEs today is the lack of guarantees. Many SMEs have major needs but no guarantees. It is in this spirit that BADEA is making its contribution, by strengthening the capital of these guarantee funds to better guarantee these SMEs. « We need to think about other mechanisms. One of these is digitalization and AI to make rapid decisions in favor of SMEs. »
Innovative mechanisms
Frannie Leautier, Senior Partner and CEO at SouthBridge Investments, recommends being innovative when it comes to financing methods. « With short-term financing, for example. It is very difficult to find this type of financing. The flexibility of short-term financing is very important. 7 days, a few weeks, a few months… » The carbon credit market, too, a large part of which falls to Africa, can benefit African SMEs.
The financing gap is not the fault of the banks, but of the lack of resources available to support our economies
Advocacy too. From one edition to the next, the Forum is the voice of entrepreneurs before public and institutional decision-makers. « We can always do better, but in ten years we have made progress, » concluded Didier Acoutey. The Cofina Academy, the BRVM’s basket bonds, the SME compartment created by Afreximbank and Enat Bank, the first bank dedicated exclusively to financing women in Ethiopia, all exist and are multiplying. But to increase the impact of these initiatives and ultimately close the financing gap, we need to act on risk assessment. This is the crux of the problem, says Ferdinand Ngon Kemoum, managing director of Oragroup, a « bank that tends to focus on SMEs ». He goes on to challenge an old misconception: « The financing gap is not due to banks, but to the lack of resources available to support our economies ». He invites us to fuel the debate on this point.
Meanwhile, as the SME Champions Forum is also a celebration of African champions, a number of awards were presented, including Entrepreneur of the Year for Safietou Seck, CEO of SARAYAA Group, and Bank of the Year for Orabank.
Related :
https://africa-news-agency.com/pme-kampala-accueille-le-retour-dafrica-sme-champions-forum/
