African Development Bank boosts continent's suppliers
The supply chain of Africa is to receive a $125 million boost aimed at benefiting small and medium enterprises (SMEs) and businesses owned by women.
The African Development Bank (ADB) is supplying the direct funding and a further $3.98 million technical assistant package, with the intention of enabling enable banks to provide standardised lines of credit to SMEs, with a special focus on female and youth-owned businesses.
The funds are being provided in an effort to boost job creation and economic growth across the entire continent. The programme is for four years.
A statement from ADB said: “In response to these challenges the ADB, through this SME programme, will provide the necessary longer-term finance and a technical assistance package to address a number of the constraints faced by around 25 target financial institutions and their SME clients across Africa.”
The $3.98 million support pot will come from the ADB’s multi-donor Fund for African Private Sector Assistance (FAPA). This contribution is the highest amount ever donated by FAPA and is intended to expand support for businesses into more rural areas of Africa, where there are higher numbers of women-owned businesses. It will be used to help 25 money lenders support SMEs, improving their capability and capacity to do so.
This programme is intended to tackle generally the challenges currently facing smaller enterprises in Africa when it comes to acquiring funding. As well as an overall lack of funding sources there is an additional problem with loans, as the majority of those available to SMEs in the continent cover no more than one year.
It is hoped by African officials that promotion of locally-owned SMEs will solidify the economies of the continent’s countries, rather than relying on business created by international companies operating in Africa.