Empirical studies show that SMEs contribute over 55 percent of gross domestic product (GDP) and over 65 percent of total employment in high-income countries. In the developed economies, small businesses are recognised as the main engines for growth and development because of their significant contributions to economic growth and prosperity.
The percentage contribution of SMEs to Gross Domestic Product (GDP)/total value added ranges from 60 percent in China, 57 percent in Germany, 55.3 percent in Japan and 50 percent in Korea, compared to 47.3 percent attained by Malaysia.
Unlike the developed world where SMEs enjoy a great deal of protection and pampering, Africa’s SMEs are said to be living on the edge – as borrowing institutions dedicate much of their loan portfolios to big business.
That is why the initiative ‘100,000 MSMEs by 2021’ launched in partnership with AUDA-NEPAD (the African Union Development Agency) to support Africa’s Micro, Small and Medium-sized Enterprises (MSMEs) couldn’t have come at a better with the imminent implementation of AfCFTA in January 2021.
The MSMSE Academy is the cornerstone of the initiative ‘100,000 MSMEs by 2021’, and is providing MSMEs with training and resources for financing opportunities, building a digital presence and adapting to the COVID-19 era.
The MSMSE Academy will be leveraging on the expertise of its Ecobank Academy to organise training tailored to suit the local realities and needs of MSMEs. The first wave of training will be launched in Ghana, Togo, Kenya, Nigeria, Ivory Coast, Niger, Rwanda and Chad.
Access to finance is a key constraint to SME growth; it is the second most-cited obstacle facing SMEs to grow their businesses in emerging markets and developing countries. The problem they have identified with these entities is that most do not keep proper books, and operate in an informal manner that makes financial institutions shy away from advancing loan portfolios to them.
Hence, the academy will upgrade their book-keeping skills, digitisation and other relevant business skills to operate professionally. The SMEs sector faces a myriad of challenges across the continent and fails to live up to expectations.
In spite of the fact that 99% of business enterprises in developing countries are SMEs, the sector is yet to exploit its potential in terms of growth and contribution to the economy. That is why the AUDA-NEPAD partnership to support Africa’s Micro, Small and Medium-sized Enterprises (MSMEs) is laudable and timely.