Despite SMEs occupying a critical role in the economy – accounting for over 90 percent of business enterprises, as well as 60 percent of the country’s gross domestic product – the SME financing gap is estimated at some US$4.8billion, one of the largest in Africa.
This contradiction formed the concern of top chief executive officers (CEOs) and business leaders at a business breakfast meeting organised by B&FT early in the week.
Participants called for intentional investments into productive sectors of the economy amid the persisting economic challenges, in addition to policies that prioritise domestic production.
They pointed out that one way to help SMEs generate jobs and increase their contributions to the economy is by making long-term credit accessible to them – along with business support programmes to accelerate their expansion.
Others raised concerns about how unconducive the operating environment is, and how there are not enough frameworks to support value added companies in spearheading the import substitution agenda so much desired by the country.
Dubbed the ‘Respected CEOs and Business Leaders Breakfast Series’, the meeting saw participants advocating support for small- and medium-sized enterprises in a bid to fully unlock the sector’s untapped potential and spur the desired economic recovery process.
Financing Small and Medium-Scale Enterprises (SMEs) to achieve desired growth and expansion has been topical for governments, policymakers, non-governmental organisations (NGOs), financial and non-financial institutions.
The recent upsurge in the interest of these stakeholders finding ways of bridging the financing gap faced by SMEs has been necessitated by their enormous contributions to the economic development and growth of countries in areas of job creation, GDP and entrepreneurial skill development.
Research has established that there indeed exists a SME financing gap in the country, as most of them are denied access to credit by commercial banks and other financial institutions.
Access to affordable credit enables MSMEs to invest in machinery and equipment, purchase production inputs in bulk and at competitive prices, and acquire the resources to attract the best talent.
It is important for MSMEs to be weighed beyond tangible assets and understood beyond income projections.
It is also important to offer a more flexible approach that allows MSMEs to obtain the needed funding without ploughing through a mountain of paperwork with no guarantee of success, thereby compromising the time needed to focus on their core business.
The average MSME has limited resources to expend on marketing and creating a brand presence beyond its immediate sales territory.
Creating opportunities for MSMEs in emerging markets, consequently, has the potential to improve economic development and reduce poverty through better livelihoods.
