Tunis — Representatives of donor agencies, commercial banking institutions and business organizations are meeting in Tunis to discuss support for Africa's small and medium-size enterprises. Meeting as the Small and Medium Enterprises Facility in Africa (SMEF-Africa), the 2-day session is focusing on the theme: Filling up the missing middle in SME financing in sub-Saharan Africa.
The event, opened by the Bank's Operations Vice President, Theodore Nkodo, brought together experts from multilateral and bilateral development institutions such as the World Bank, the International Labour Organization (ILO) and the European Investment Bank (EIB), as well as representatives of commercial banks and private sector businesses such as Britain's Barclays and TUNINVEST, a Tunisian risk management firm.
The meeting noted that African economies are very dependent on Small and Medium Enterprises (SMEs) for growth and job creation but SMEs suffer from an important investment shortage which prevents their development.
Participants singled out obstacles to financing of SME projects by banking institutions. The insufficient administrative and managerial capacity of SMEs as well as the investment cost of projects, increased by the risk factor and the lack of information about the businesses, constitute some of the major reasons Bank are reluctant to invest in SMEs.
To face these problems, Mr. Andreas Antoniou, the Head of International Finance and Capital Markets at the Commonwealth Secretariat, said the key element to encourage investment in SMEs in Africa is to bring the SMEs projects financing risk down. In order to do so, sharing the risk by developing synergies between local banking systems, Multilateral Development Banks and donors governments is essential. Close cooperation between development institutions, institutional and commercial banks, public and private stakeholders is needed, he said. Combining financial support with training and managerial support as well as reducing the risk and cost of investment is also crucial.
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Mr. Nasser Bourenane of the ADB's Private Sector Department put emphasis on shared knowledge from the experiences of development partners and from global best practices. The centralization of information on SMEs financing by these partners in a common data base was proposed as a tool to enhance cooperation in this field.
New ADB Strategy for Private Sector Development
In 2004 a New ADB strategy in favour of the Private Sector Development has been approved by the Board of Directors. Its objectives are the reinforcement of investment climate, socio-educational infrastructures and of financial sector capacity and technical skills. Developing a proper entrepreneurship culture in the region is another important goals.
In the framework of this new strategy the Bank has launched two major programs:
· Franchising Program. The first country to benefit from the program in favour of Franchising development is South Africa.
· The African Women in Business (AWIB) Program. The AWIB program focuses on assisting andpromoting African Women in growth-oriented SMEs
