Innovative approach key to increase access to finance for African SMEs

African small and medium enterprises’ (SMEs) financing gap is proportionally much greater than other regions, primarily because it is working from such a low starting point, McKinsey & Company South Africa said this week in Johannesburg, adding that diversified economies have a greater proportion of informal and micro enterprises and greater access to finance than other economies.

Issa Sikiti da Silva

Gary Pinshaw, a partner of the International Finance Corporation (IFC), said an increase in access to finance for African SMEs will require a transformative and innovative approach such as follows:

  • Improve the enabling environment, for example greater protection for creditors, enabling technology-enabled business models such as mobile banking to make it easier for informal enterprises to register.
  • Strengthen the financial infrastructure, for example credit bureaus, collateral registries, well-functioning payments system.
  • Establish a global SME Finance Forum and global platform to build capacity, and mitigate risks and promote innovation and foster SME finance sustainably.

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