SMEs contribute significantly in emerging economies |03 April 2017
Small and medium-sized enterprises are the largest job creators in Africa.
According to the World Bank, small and medium-sized enterprises (SMEs) contribute up to 45% of total employment and up to 33% of national income (GDP) in emerging economies. However, SMEs are struggling to get access to finance, which is limiting their growth.
A diversified economy is indispensable to protect African countries from global financial, economic and environmental crises. SMEs are key to create a more balanced economy and therefore governments should be responsible for building a welcoming environment for the private sector.
With this in mind, EMRC convened the 11th Africa Finance & Investment Forum (Afif) 2017 at the Strathmore University in Nairobi, last month under the title ‘Entrepreneurship & Innovation 4 Growth’.
The Afif 2017 gathered over 200 participants to address how to access finance in leading economic sectors in Africa – agriculture and agribusiness, infrastructure, energy and healthcare. One of the main objectives of the forum was to connect entrepreneurs with potential investors. Over 400 B2B (business-to-business) meetings were organised during the conference. The Afif programme included the training for entrepreneurs ‘Scaling your Entrepreneurial Venture’ at the Strathmore Business School. The entrepreneurs learned how to present a business plan, how to pitch and communicate their project and how to access funding in Africa. The training also included a special session about the Japanese Kaizen method, delivered by experts from the Japan International Cooperation Agency (Jica). One of the highlights of the Afif was the presentation of the finalists’ projects for the Afif Entrepreneurship Award 2017, supported by the Rabobank Foundation:
Solutions to unlock funding for SMEs were discussed at large during the Afif 2017, together with the need to invest in the education of the next generation in order to avoid a skills gap in the near future.
The Afif 2017 was convened by EMRC and hosted by the Strathmore University; in collaboration with Kenya Investment Authority, Japan International Cooperation Agency (Jica), Rabobank Foundation, Afreximbank, African Guarantee Fund, USAID-East Africa Trade and Investment Hub, East-African Chamber of Commerce, AMSCO, Kenya Tourism Board, International Finance Corporation, ESPartners, European Investment Bank, Cadre Intégré Renforcé, Pharmaccess and Green Arava.
As for the Afif, it is an annual business platform initiated by EMRC in 2005 that aims to encourage entrepreneurship, promote the growth of SMEs and attract the right investments to Africa.
EMRC, based in Belgium, believes that SMEs are the key drivers for growth: In developed regions they are responsible for over 50% of GDP and over 60% of employment and economies across sub-Saharan Africa follow a similar model. However, one of the principal constrains to their growth, is a lack of access to finance. SMEs are situated in the “missing middle” category, the gap between microfinance and traditional financing. Those seeking microfinance are relatively well served, but small and medium-sized enterprises (SMEs), which by their nature should contribute to a larger and more sustainable economic and social growth, lack not only the necessary capital, but also the institutional support.
To encourage SME growth in Africa, Afif offers an interactive platform for the entrepreneurs making a difference, for the financiers already investing in Africa, as well as for the larger financial institutions and enterprises interested in accessing this growing market segment.