Funding MSME’s in Africa is Key to Job and Wealth Creation
MasterCard reports that Sub Saharan Africa has about 44 million Micro, Small and Medium Enterprises (MSMEs). The Center for Strategic and International Studies (CSIS) reports that the majority of these enterprises are micro, facing significant growth
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MasterCard reports that Sub Saharan Africa has about 44 million Micro, Small and Medium Enterprises (MSMEs).
The Center for Strategic and International Studies (CSIS) reports that the majority of these enterprises are micro, facing significant growth challenges due to the twin problems of accessibility and affordability to capital.
The reasons might be staring us in the face. MSMEs in Africa are frequently informal, meaning they are not formally registered as businesses; making it difficult for them to access financing from formal channels. Where funding is available, rates are double digit and cutthroat. In Nigeria for instance bank lending rates are at least 30% and unsuitable for small businesses that struggle to provide their own infrastructure including expensive electricity generation.
As African economies struggle to recover from the setbacks of the COVID-19 pandemic, policies and practices that promote the ‘hand-holding’ of the MSME sector will be a sure path to catalyze economic recovery for the benefit of the continents 1.3 billion citizens.