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Partnerships with financial institutions crucial for African SMEs

27 January 2005

trade
"There is a need to find efficient and market-friendly ways to allocate the risks among partners"
Developing partnerships with international financial institutions, regional development banks and the private sector can help provide access to long-term finance for small and medium enterprises (SMEs) in Africa.

Professor Andreas Antoniou of the Commonwealth Secretariat made this point at a meeting of the Working Party on SME Financing in Africa held in Tunis, Tunisia, on 12-13 January 2005. "There is a need to find efficient and market-friendly ways to allocate the risks among partners, in order to reduce the overall risks associated with long-term lending to SMEs," said Professor Antoniou.

The meeting was organised by the Commonwealth Secretariat, the African Development Bank and the New Partnership for Africa's Development (NEPAD) Secretariat. It was attended by delegates from the European Union's Centre for Development of Enterprise/ProInvest, the International Labour Organisation, the European Investment Bank and Commonwealth Business Council/Strategic Partnerships for Business Growth in Africa.

The Working Party, which was meeting for the second time following its first meeting in Johannesburg, South Africa, last year, explored alternative ways to address the challenges of raising funds for SMEs in Africa. Participants examined the EU's ProInvest programme managed by the Centre for Development of Enterprise and other ways of linking finance and business development services to the needs of African SMEs.

The Working Party also reviewed the role governments should play in improving the investment climate in Africa.

"We looked at measures to facilitate SME financing including the use of guarantees, franchising and the special role that remittances from the African diaspora can play in enhancing the flow of funds for SME investment," said Professor Antoniou.

He stated that there was a need to develop a broad strategic framework to implement the findings of the Working Party and to explore ways to execute some ideas proposed at the meeting. This, Professor Antoniou said, would help to operationalise an SME financing facility in Africa.

 

CNIS - the Commonwealth News and Information Service Issue 219 26 January 2005

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