Nigeria’s vast array of dynamic and creative entrepreneurs will be major beneficiaries of the additional €1 billion that has been raised by France to provide credit facilities for African businesses through the Choose Africa Initiative.
Franck Riester, French Minister of Foreign Trade and Attractiveness, disclosed on Wednesday that an additional €1 billion had been raised to fund the Choose Africa Initiative in order to provide credit facilities for businesses, particularly the Micro, Small and Medium-scale Enterprises (MSMEs).
In his address at the Choose Africa Initiative beneficiaries’ feedback forum in Lagos, Riester said although €2.5 billion was dedicated to financing and supporting 10,000 African MSMEs by 2022, the additional €1 billion was raised in order to mitigate the various disruptions occasioned by the COVID-19 outbreak.
“With the initial €2 billion, 16,000 businesses and thousands of micro-entrepreneurs would be financed, 20,000 direct jobs will be maintained or created while 1.4 million indirect jobs will be maintained or created,” he said.
Riester said France was ready to help Nigeria develop and achieve its operations, noting that Lagos has vast amount of dynamic and creative entrepreneurs and as such, major beneficiaries of the fund will be Nigerian businesses.
Nigeria had a total of 41.5 million MSMEs as of December 2017. Of this number, 99.8 percent or 41.4 million were micro enterprises, while 0.2 percent or 73,081 were small and medium scale enterprises, according to the National Bureau of Statistics (NBS). These businesses are scattered across various sectors, but they are majorly found in the trade sector both for wholesale and retail, agriculture sector, manufacturing sector, food services, etc.
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“In Nigeria, Proparco’s operations especially aim at financing SMEs in the education sector and the renewable energy or energy-efficient projects, as well as SMEs set up by women. Corporate financing is a pressing issue which France wants to tackle,” Riester said.
“Our ambition is to craft a new sustainable financing framework aimed at fostering fair and long-term growth across the economy,” he said.
The minister urged that it is necessary to build more bridges between companies and businesses in both countries, particularly among the MSMEs, in order to build a strong long-term economic partnership beneficial to both countries.
According to Riester, efforts are being made to improve the programme, which is why a Choose Africa Forum will be held in July in Montpellier, adding that the forum will also move to develop ties that bind the French and African business communities.
The Choose Africa Initiative powered by Proparco, launched in November 2017, provides credit, direct loans and equity financing directly and indirectly for entrepreneurs through venture capital funds, with the aim of easing the difficulties experienced by SMEs in obtaining loans.
Olamipe Seriki, regional head, Global Financial Institutions & EMDOS, UBA, mentioned during a fireside discussion that the Choose Africa Initiative had helped a lot of businesses but additional liquidity support was required.
She, however, noted that heightened risk on the expected cash flows of the businesses has been observed, necessitating the introduction of additional products for risk mitigation. This, she said, would be very helpful for both the beneficiaries and credit managers.
According to the NBS, in Nigeria, MSMEs contribute 49 percent to the national Gross Domestic Product (GDP), account for 96 percent of businesses and 84 percent of employment. Thus they contribute significantly to the economy through sectoral development, provision of employment opportunities and poverty reduction.
Despite its relevance to economic growth, access to finance is a major problem, a challenge that has constrained growth and expansion opportunities in the sector.
The International Finance Corporation (IFC) also estimates that 65 million firms, or 40 percent of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year, hence the French additional fund is expected to boost the sector to perform its major roles to the African continent.
