Nairobi — African Development Bank (AfDB) has ratified a programme aimed at realizing inclusive growth on the African continent.

The four year multi-million shilling programmewill target Small and Medium Enterprises (SME) where it is believed that most of the African population falls.

The bank has signed of a $125 million funding programme alongside another $3.98 million which will come in form of technical assistance to build capacity among micro, small and medium enterprises (MSMEs) in Africa.

The funding follows a research that was undertaken by the bank which revealed that there is a threat of low and sections of the medium income cadres being left out of the general development among African countries. The research showed that the gap between the rich and the poor is ever increasing on the continent. The funds will especially target women and youth groups who form a huge chunk of the African population.

The SME sector is considered critical to the growth of the African continent. It contributes an estimated average of 45 per cent to employment and another 33 per cent to the general Gross Domestic Product (GDP).

According the AfDB, despite the potential that SMEs have in ending [poverty and transforming the economy of Africa, they reel from a myriad of challenges key among them being lack of access to funding. An estimated $140 billion funding gap for SMEs exists in Africa.

"The collateral levied by funding institutions is well beyond the reach of most SMEs. this is coupled with the fact that 60 per cent of the available credit to these institutions has a repayment period of one year and below. This exposes the reality that access to affordable, long term funding is a major challenge," reads a section of the report from AfDB.

This funding gap is what the continental bank will be seeking to bridge under the latest programme.

AfDB has in the recent times come across as a critical institution in the development of Africa especially in regards to infrastructure projects funding. The bank in currently financing a number of projects across the continent most of them spread across infrastructure areas like roads, energy, rail among others.

The now famous Thika Superhighway in Kenya was partly financed by the bank.

Women are likely to benefit from the expanded outreach as they tend to operate more often in rural-based smaller enterprises.

The social effects of the Africa SME Program will be significant given the particular support to microfinance institutions in low-income countries and fragile states, thus deepening access to finance for micro and small enterprises.