SMEs Key to Unlocking Africa’s Economic Potential

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Small and Medium- sized Enterprises (SMEs), have become key pillars for burgeoning Africa economic growth. SMEs constitutes about 90 percent of all business in Sub-Saharan Africa, creating more than 80 percent of employment in the region. SMEs in Africa contribute more than 60% of total Gross Domestic Product. The scale of this transformation should not be undermined. Pathway breaking offerings by SMEs , in form of new goods and services has great result in intensifying job creation, which produce a cascading effect or virtuous circles in the economy. The cascading effect  of increased employment and higher earnings, contribute immensely to better national income in form of higher tax revenue. Supporting  SMEs in Africa to flourish is crucial because it creates a growing middle class with disposable income, in tandem with market opportunities for new investors.

SMEs have been playing a vital role by investing in community projects and financial support to charity organisations, enabling further development beyond their own ventures. One thing is clear, whether it’s a small barber shop or a dry cleaning shop down the street, Small and Medium-sized business drive the national economies. Given the potential of SMEs to unlock Africa Economic growth, one of greater challenges, however, is access to credit which remains a hurdle. Addressing the challenge has not been a much priority for governments and regional organisations for several years.

However, there are some countries and organisations making effort to promote the growth of SMEs in the region. Notable examples include Africa Development Bank (AfDB), which runs an SMEs programme designed to support micro, small and medium enterprises in Sub- Saharan Africa.  AfDB has sponsored SMEs in Burkina Faso, where it has 2.5 million euros in credit to Fidelis Finance, one of the country’s largest providers of SME Loans. Up to 70 SME’s have received financing through this initiative.  This has contributed to the creation of employment of more than 500 jobs. Private sector companies  Assistance has played a crucial role in promoting the growth of SMES in Africa for example, Unilever young entrepreneurship program aimed at funding projects by young entrepreneurs in the SMES sector.

Some Sub-Saharan countries themselves caught on the need for investment, Angola, in particular, has made great strides towards helping SMES with its program called Kijinga. The program role is to support the SMEs through financial assistance and skill training. In Zimbabwe, the government has also availed a fund through the Ministry of Small to Medium Enterprises aimed at assisting small firms with capital and training. The President of Kenya once hosted some of the  Global top entrepreneurs and secured funds to promote the energy sector with the fund channelled to SME’s  in the energy sector. Programmes such as these could transform the economic activities in Africa, spearheading economic growth across the region.

 

By Patson Chapeyama

Patson Chapeyama is a cutting edge writer and Business growth expert. He is the author of bestselling success books and columnist in local and international news platforms such as Newsday (Zimbabwe) and Making Finance for Africa (African Development Bank Ivory Coast).  He is also an editor for a number of local magazines and books. He has been involved in several local and International business startup projects. For engagement can be reached on, +263733551626/ patchapeyama@gmail.com.

 

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