'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 date:
Friday, 30 July 2021
Author:
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.

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