By Babajide Komolafe
LAGOS — The African Development Bank, yesterday, committed N20 billion to a four year program to support micro, small and medium enterprises in Africa.
In a statement, the Bank said: “Board of Directors of the African Development Bank, AfDB, approved today the Africa Small and Medium Enterprises, SME, Programme, a four-year, US $125 million funding programme combined with a US $3.98 million technical assistance package granted by the Fund for African Private Sector Assistance, FAPA, aimed at supporting micro, small and medium enterprises, MSMEs, in Africa.
“The programme will provide standardised lines of credit, LoCs, mostly in local currency, and technical assistance to targeted financial institutions, predominantly in low-income countries spread over all five African regions.
“The SME Programme will avail important longer-term resources to thousands of SMEs including women and youths, thus contributing to job creation and poverty reduction in the continent.
“The SME sector is crucial to Africa’s growth, contributing more than 45 per cent to employment and 33 per cent to GDP. SMEs continue to face significant challenges. Studies indicate that more than 70 per cent of SMEs lack access to medium/longer-term finance, creating an SME funding gap of more than $140 billion in Africa alone.
“Well performing local SME-focused financial institutions lack access to longer-term resources from depositors, capital markets or other potential funders hindering the provision of medium and long-term SME finance.
“In response to these challenges the AfDB, through this SME programme, will provide the necessary longer-term finance and a technical assistance package to address a number of the constraints faced by around 25 target financial institutions and their SME clients across Africa.”