The African Development Bank (AfDB), a development finance institution that disburses loans and grants to governments and private companies in Africa, recently presented its inaugural Thought Leadership Seminar to boost the development of micro-, small and medium-sized enterprises (MSMEs) in Africa, as part of its knowledge sharing program.
Edoardo Ginevra, Marc Beaujean and Tony Goland, from the global management consulting firm McKinsey and Company addressed barriers confronting the MSME sector in Africa and the possible interventions that development finance institutions could use to attempt to overcome these barriers. Financial barriers include limited access to financing from banks, limited equity financing options and limited insurance coverage, contributing to a credit gap of approximately USD 400 billion for MSMEs in Africa. Non-financial barriers for MSMEs consist of cumbersome regulatory, tax and legal environments; inadequate infrastructure; and corruption. In order to address these barriers, the following four potential interventions by AfDB were analyzed: establishment of credit bureaux, setting up risk-sharing facilities, the creation of special economic zones and up-scaling microfinance institutions (MFIs) to serving relatively large businesses.
By Medha Ravi, Research Associate
About African Development Bank (AfDB):
Established in 1964, AfDB is an institution that provides loans and grants to governments and private companies in Africa. AfDB commits approximately USD 3 billion annually to African countries as of 2009. Owned and funded by member governments, the bank has a public-interest mandate to reduce poverty and promote sustainable development. Currently, AfDB shareholders consist of 77 member countries, which include 53 African countries. As of 2011, the president of AFDB is Donald Kaberuka.
Source and Resources:
African Development Bank Group news article, “AfDB Inaugural Thought Leadership Seminar on Boosting MSMEs in Africa”, http://www.afdb.org/en/news-events/article/afdb-inaugural-thought-leadership-seminar-on-boosting-msmes-in-africa-7811/
MicroCapital.org story, November 2, 2010, “MICROCAPITAL BRIEF: African Development Bank (AfDB), Governments of Denmark and Spain to Create African Guarantee Fund (AGF) to Bring Economic Resources to African Businesses Including Microfinance Institutions (MFIs)”, https://www.microcapital.org/microcapital-brief-african-development-bank-afdb-governments-of-denmark-and-spain-to-create-african-guarantee-fund-agf-to-bring-economic-resources-to-african-businesses-including-microfinance-in/
MicroCapital.org story, November 8, 2010, “MICROCAPITAL BRIEF: African Development Bank (AfDB) to Provide $23m in New Funding to Tanzanian Small Entrepreneurs Loan Facility (SELF), 1600 Microfinance Institution (MFI) Staff Members to Upgrade Skills”, https://www.microcapital.org/microcapital-brief-african-development-bank-afdb-to-provide-23m-in-new-funding-to-tanzanian-small-entrepreneurs-loan-facility-self-1600-microfinance-institution-mfi-staff-members-to-upgrade-s/
MicroCapital’s Microfinance Universe Profile:African Development Bank (AfDB), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=African+Development+Bank++(AfDB)
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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