AfDB‎ wants credit providers to increase African MSMEs lending to $135bn

African Development Bank (AfDB) has called on financial markets to increase affordable loans to the tune of $135 billion, while also providing more diverse and innovative financing instruments to Africa’s micro, small and medium sized enterprises.
Credit providers need to increase their lending by at least $135 billion in order to meet demand by African Micro, Small and Medium-sized Enterprises (MSMEs), a statement issued by AfDB on Wednesday said.
Industrialisation, the statement said, is one of the High 5s priority areas of the AfDB.
In the statement issued to mark the United Nations’ Micro, Small and Medium-sized Enterprises Day, June 27, AfDB stated that firms with fewer than 20 employees and less than five years experience provide the most jobs in Africa’s formal sector.
It further quoted Akinwunmi Adesina, president of African Development Bank Group, saying, “The entrepreneurial culture is vibrant with about 80% of Africans viewing entrepreneurship as a good career opportunity. The continent has the highest share in the world of adults starting or running new businesses, but often in sectors where productivity remains low.
“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.”
According to the UN, micro, small and medium-sized enterprises represent around 90 percent of global economic activity and are on the front lines of embracing transformative technologies and new business models.
In 2016, the AfDB provided financial services to 156,000 individual owner-operators and micro, small and medium enterprises through financial intermediaries, addressing a key constraint to starting up and growing businesses.
The AfDB also worked with USAID, the Fund for Africa Private Sector Assistance and the International Labour Organisation to build the capacity of small and medium enterprises (SMEs) in Zambia, and enable national financial institutions to become efficient at lending to smaller business.
The bank is also launching a number of new programmes that are designed to help move Africa toward its industrialisation goals, the statement said.
For instance, in 2016 the bank launched Fashionomics (the economics of fashion) initiative to increase Africa’s participation in the global textile industry supply chain.
‎It is an AfDB initiative to support the development of micro, small and medium-sized businesses (MSMEs) operating in the textile, apparel and accessories (TA&A) industry in Africa, with a focus on women and youth empowerment.
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, the statement added.

 

HARRISON EDEH, ABUJA