'Funding challenges undermine SMEs’ growth in Africa'

'Funding challenges undermine SMEs’ growth in Africa'
Deputy Assistant Secretary of State for African Affairs, Akunna Cook
Published
Friday, 30 July 2021 ~ Emma Okonji

Analysts who spoke at a recent webinar organised by the American Business Council in Nigeria, in collaboration with US Chamber of Commerce, Amcham Ghana and Amcham South Africa on the US-Africa relations, have identified lack of adequate funding as a major challenge to the growth of Small and Medium Enterprises (SMEs) in Africa.

The analysts were of the view that SMEs across Africa are faced with serious funding challenges, despite their importance to national development.

Citing the case of Nigeria, the analysts said: “Despite the significant contribution of SMEs to the Nigerian economy, challenges still persist that hinder the growth and development of the sector.

In Nigeria, SMEs contribute 48 per cent of national GDP, and account for 96 per cent of businesses and 84 per cent of employment.”

They explained that the Organised Private Sector (OPS) had raised concerns about the inability of manufacturers and small businesses to access the various interventions amounting to N1 trillion from the Central Bank of Nigeria (CBN).

The Deputy Assistant Secretary of State for African Affairs, Akunna Cook shared that the United Stares of America is very keen to strengthen the Micro, Small and Medium Enterprises (MSMEs) space in Nigeria by encouraging US MSMEs to invest in Nigeria.

A 2018 survey carried out by the National Bureau of Statistics (NBS) in collaboration with the Small and Medium Enterprise Development Agency in Nigeria (SMEDAN), revealed that there were 41.5 million MSMEs in Nigeria.

According to a recent PwC survey, a funding gap of about N617 billion for small businesses exists in the country, necessitating the need for development finance institutions (DFIs) and other stakeholders to reduce access barriers against businesses in the country.

United Nations Industrial Development Organisation (UNIDO), in its recommendations on how to stimulate growth of SMEs, noted that for countries in fragile and conflict-affected situations like Nigeria, the compounded impact of demand crises, disruptions to transportation and value chains, and limited availability of credit have been forcing MSMEs to cease operations.

Described as the backbone of the middle class, Cook, said at the webinar, that the United State government would be encouraging businesses especially SMEs to take a closer look at sub-Saharan Africa, urging smaller American companies to take advantage of dynamic African economies.

“We are also engaging numbers of the African Diaspora in the US who are interested in closer connection in Africa including through increased trade and investment. Our engagement also includes the African Growth and Opportunity Act (AGOA), where 39 countries including Nigeria are AGOA beneficiaries and we encourage beneficiaries to take advantage of the opportunity to increase job opportunities and economic diversification.”

She reminded the Nigerian government that ad-hoc policies were detrimental to commercial operations which undermine the investment climate.

The US Ambassador to Nigeria Mary Beth Leonard, said African countries remained US partners in pursuing its shared interests which includes global health, climate change, economic growth and many other areas, stressing that the US government sees great promise investing in Africa’s digital transformation to drive e commerce that will grow the MSME space.

Vice President, Public Affairs, in charge of EMEA, at American Tower Corporation, Ravi Suchak, said: “Africa’s expanding ICT sector presents the new US Administration with an unprecedented opportunity to strengthen US-African commercial ties. Leveraging this opportunity will require a comprehensive strategy for public and private investment, trade and development in Africa; and additional support to US companies doing business on the continent.”

The president, American Business Council, Dipo Faulkner, stated that Africa is a natural partner to the United States.

“Doing business has been very fruitful for those of us doing business in Africa, notwithstanding the challenges, but we believe forging strong bilateral ties would open up fresh opportunities for trade and investments for both countries,” Faulkner said.

View related news articles

Nigeria: How exporters can boost non-oil export with e-commerce - NEPC

The Nigerian Export Promotion Council (NEPC) has tasked exporters in the country to explore e-commerce to boost Nigeria’s non-oil export sector and reach global markets. The Regional Coordinator, South West, NEPC, Mr Samuel Oyeyipo, made the call while speaking at a sensitization workshop organized by the agency in Lagos themed Earn Dollars by Selling on Amazon. Speaking on the situation caused by the global pandemic on Nigerian...

14 September 2021

US and South Africa's Western Cape province mark 6 month anniversary of trade and investment promotion partnership

The U.S. Consulate General in Cape Town and the Western Cape Government marked the first six months of the Trade and Investment Promotion Partnership, launched in February 2021. The partnership deepens bilateral cooperation and coordination to promote and increase bilateral trade and investment through various engagements, events, and high-level interactions. It reflects the United States’ role as the top foreign direct investor in the...

11 August 2021

'The renewal: US-Africa relationship'

In his first allocution to African leaders at the virtual African Union Summit in February, recently elected United States President, Joe Biden, reiterated his administration’s commitment to rebuilding partnerships with Africa and re-engaging with international institutions such as the African Union. Biden set out his foreign policy priorities, pointing towards multilateralism and a healthier US-Africa relationship. Within days of his...

13 April 2021

NACC restates commitment to trade ties between Nigeria, United States

With less than five years to the end of the extended African Growth and Opportunity Act (AGOA), the Nigerian American Chamber of Commerce (NACC) has reiterated its commitment to ensuring that Nigeria enjoys the benefit of the scheme. With the change of the United States political leadership, the Chamber is hopeful that ties between the two countries would improve, even as it urged the government to address environmental challenges limiting...

19 February 2021

Nigeria: ‘Prospects of improved supports from US bright under Biden’

Director General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, told DEBO OLADIMEJI that he expects more support for Nigeria from the United States (US) under the Biden administration.  What are the economic implications of Joe Biden Presidency For Nigeria?There is likely to be some positive changes as far as bilateral economic and trade relations are concerned.  The US-Nigeria Bi-national Commission,...

23 January 2021

Nigeria’s duty-free export to US shrinks to $351m

Nigeria’s export to the United States under a duty-free policy declined in the first nine months of 2020, recording $351.73m from January to September. According to the latest African Growth and Opportunity Act policy trade statistics, exports to the US under the policy fell by 86.97 per cent from $2,699.13m in the first nine months of 2019 to $351.73m in the corresponding period in 2020. The AGOA, a United States’ trade policy, enacted...

27 December 2020

Chamber plans business parks to deepen US-Nigerian trade relations

The Nigerian America Chamber of Commerce says it is planning to establish parks in states for businesses to benefit from the duty-free Africa Growth Opportunities Act of the United States government. The President, NACC, Otunba Toyin Akomolafe, during a courtesy visit to The PUNCH head office in Ogun State on Tuesday said the parks would be a platform to create awareness of the eligible products and acceptable standards by the American...

16 December 2020

Ghana Apparel Training Centre launched to develop garment industry

In efforts to support Ghana’s garment manufacturing industry, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, together with its partners – Ethical Apparel Africa (EAA), Gerber, Groz Beckert, Freudenberg and Accra Technical Training College (ATTC), have officially launched the Ghana Apparel Training & Service Centre, in Accra. The launch forms part of a public-private partnership between the German Federal...

27 November 2020

SA president to meet with US Chamber of Commerce over investment

President Cyril Ramaphosa will participate in a virtual business and investment roundtable on Tuesday (10 November) with representatives from three major business organisations from the United States. The organisations are the Business Council for International Understanding (BCIU), the Corporate Council on Africa (CCA), and the US Chamber of Commerce. “The president will be supported by South Africa’s Ambassador to the United States, Ms...

10 November 2020

Opinion: 'Trump vs. Biden: This is how it could impact South African agriculture'

As the race for the White House continues, agriculture leaders say a win for Democrat Joe Biden will strengthen and fast-track trade relations between South Africa and the United States. Currently, the race between pres. Donald Trump and Biden hinges on tight races in battleground states. Trump has already falsely claimed victory while Biden called for patience and every vote to be counted. Meanwhile Mzansi’s [>South Africa<]...

05 November 2020