Invest Africa has launched a new programme of support for over 500 African MSMEs.
In a statement, the company, which is a trade and investment platform for African markets, says it will be hosting the Next Generation Africa Forum to connect MSMEs across the Continent.
The forum will take place virtually on 16th September using a digital platform, with practical support from leading banks, VCs, multi-national tech companies and incubators, including Google, KPMG, DHL, Aon and 4G Capital.
“MSMEs form the backbone of Africa’s economies and are the engine of the region’s job creation drive, accounting for 70 percent of employment,” the company said in a statement.
The firm also noted that with a high proportion of informal enterprises, many of Africa’s MSMEs, which already faced significant challenges, have been hit hard by the Covid-19 pandemic.
Addressing the structural difficulties that small businesses in Africa face, will therefore be essential to both the Continent’s short-term economy recovery and long-term development.
The firm further notes that African MSMEs have historically faced numerous barriers to growth.
Access to private financing for early-stage businesses is one of the biggest challenges.
Small market sizes and low levels of regional integration preclude many private investment options.
The company also stated that commercial banks struggle to offer adapted loans where collateral is limited and credit assessments are often unreliable, leaving smaller businesses faced with higher interest rates than their larger peers.
In sub-Saharan Africa, lending to MSMEs accounts for only between 5 and 20 percent of traditional banks’ portfolios compared to a range of 20 to 60 percent for OECD countries. Even where financing can be secured, to be successful it needs to be accompanied by technical support to combat the skills deficit faced by many MSMEs.
“Through a series of free to access interactive workshops, pitches and discussions, the Next Generation Africa Forum will aim to overcome such barriers, offering MSMEs the support they need to thrive in a challenging economic context,” the company said.
Karen Taylor, CEO of Invest Africa said, “The engagement we have received from our partners in the private sector and government is testament to the importance of MSMEs to Africa’s future growth and Invest Africa remains committed to leveraging our market position to support a healthy business environment for MSMEs and investors alike.”
This comes at a time when Small and Medium Enterprise (SME) confidence in Sub-Saharan Africa is on the rise, according to the latest research by Mastercard.
The inaugural Middle East and Africa (MEA) SME Confidence Index found 74 percent of SMEs in Sub-Saharan Africa are optimistic about the next 12 months.
In fact, 68 percent of SMEs in Sub-Saharan Africa are projecting revenues that will either grow or hold steady. Almost half (48 percent) are projecting an increase.
The report also finds that as many regional economies gradually enter the normalization and growth phase, and social restrictions continue to ease, small and medium sized businesses in Sub-Saharan Africa have identified upskilling staff for the future (73 percent), access to training and development support (69 percent), and easier access to credit (69 percent), as the top three drivers for growth.
Among all regions surveyed, Sub-Saharan Africa also saw the highest potential in being able to do business internationally (62 percent).
“This highlights the opportunities for small businesses that arise from both internal transformation and global connections, as well as industry regulations and trends,” the report noted.
When asked about the main thing that keeps them up at night, 56 percent of SMEs in Sub-Saharan Africa mentioned the challenge to maintain and grow their business was their top issue.
Looking at concerns over the next 12 months, over half (57 percent) identified the rising cost of doing business, while 49 percent cited access to capital.
Private sector partnerships (59 percent) and government-led initiatives (51 percent) were identified as having the biggest potential to positively impact SMEs and the wider Sub-Saharan Africa market.