Credit Suisse, a Switzerland-based financial services company with operations in 50 countries, recently announced
At the SAM (Semaine Africaine de la Microfinance) plenary on “Public Solutions to Promote Entrepreneurship in Africa,” Kennedy Komba of the Alliance for Financial Inclusion (AFI) explained that his institution’s SME (Small and Medium-sized Enterprise) Working Group comprises 53 regulatory and policy-making bodies. To facilitate the growth of entrepreneurship, these agencies have created collateral registries, adjusted lender liquidity ratios, updated know-your-customer frameworks and established rules for digital financial services. Trainers in Zambia used a financial education game to reach 5,000 people, of whom 80 percent were able to improve their businesses as a result. In Ghana, the Ministry of Agriculture and the Bank of Ghana collaborated to boost local value chains in an effort to reduce costly food imports. The effort included risk sharing to increase lending to farmers, encouraging insurance uptake, improving financial institution rating systems and integrating smaller farms into value chains.
Millison Narh of the African Rural and Agricultural Credit Association argued that agribusiness “has huge potential to create jobs and increase incomes.” While the sector has the potential to grow four-fold, he said it requires additional investment on the order of USD 400 billion. As progress, Mr Narh cited the national entrepreneurship strategy launched this month in Ethiopia as well as an “enabling environment” strategy in Ghana that was supported by the US government. This effort includes aligning the work of the four Ghanaian financial regulators to develop financial infrastructure and attempt to reduce lending rates.
Maimouna Gueye of the African Development Bank (AfDB) agreed that interest rates are too high and added that loan terms are too short to meet the needs of growing enterprises. She also argued in favor of AfDB’s practice of nudging lenders to provide technical assistance along with loans.
Ibrahima Keita of Kafo Jiginew said that, from the perspective of his microfinance institution (MFI), “the realities on the ground are different, in that resource mobilization is the holy grail.” He continued, “It is essential that eligibility be softened to help MFIs get more funds.”
Nigeria’s goals include job creation, food security, reduced imports, a single-digit inflation rate and a stable exchange rate, according to Olukayode Oluwole of the Central Bank of Nigeria. He described the recent establishment of a national collateral registry for movable assets, such as photographic or construction equipment, as a means to increase the flow of credit to SMEs, which now stands at just 0.2 percent of total lending. So far, commercial banks and MFIs have registered 17,000 assets valued at USD 20 million. In addition, a new system offers customers a uniform identification number that can facilitate their dealings with each financial institution they patronize.
AfDB’s Enable Youth program provides young Nigerians with funding and coaching to help them make a living in agriculture. Entrepreneurship Development Centers in the country also offer four-week training sessions on business skills such as writing proposals for graduates of technical schools. Those with only a high-school diploma attend an additional two weeks of training.
Rachael Mushosho of the Reserve Bank of Zimbabwe also spoke of the importance of boosting business skills. In targeting youth and women, her organization has been convening private and public organizations – including universities and agricultural groups – to align strategies. To maximize practicality, representatives of private organizations head each subcommittee. Accomplishments to date include a funding facility specifically for people with disabilities; the establishment of a credit reference bureau used by banks, MFIs and utility companies; the passage of a law for a collateral registry, which is now in its implementation phase; and a credit guarantee scheme to encourage lenders to expand the range of clientele they serve. On the ground in Zimbabwe, the Indian government is supporting microenterprise incubators, and the Zimbabwean government has set up rural information centers offering education on financial products. In addition, a UN partnership has helped people in areas of drought access funding and training. In summary, Ms Mushosho said we must focus on the ease of doing business as we seek to “develop a sustainable ecosystem for SMEs.”
Among the other panelists taking a broader view of entrepreneurship, Mr Keita argued that we can reduce armed conflict by reducing poverty and despair though business success.
This feature is part of a sponsored series on the third SAM, which took place from October 9 to October 13 in Addis Ababa. It is organized by ADA, an NGO based in Luxembourg, with the support of Luxembourg’s Ministry for Development Cooperation and Humanitarian Affairs, in partnership with Microfinance African Institutions Network (MAIN), African Rural and Agricultural Credit Association (AFRACA), African Microfinance Transparency (AMT), the Association of Ethiopian Microfinance Institutions (AEMFI) and Kenya’s Association for Micro-finance Institutions. MicroCapital was engaged to report on-site from the event.
Sources and Additional Resources
2017 SAM Conference
Coverage of the 2017 SAM in Addis Ababa and the 2015 SAM in Dakar by MicroCapital
At the gala dinner at the SAM (Semaine Africaine de la Microfinance) conference, Olivier Massart, the General Manager of ADA, argued that the attendees of the event have incurred a “moral obligation” to increase financial inclusion. The 650+ attendees spent an estimated total of USD 1 million to USD 2 million on travel and registration fees. Because they elected not to spend this money directly on serving poor people, Mr Massart challenged each delegate bring at least one additional person in to the financial system for each
Linden ‘Mark’ Mahfood and Robert Taylor recently launched Mundo Finance Limited, a Jamaican firm offering “short-term business loans, trade financing and personal loans” as well as financing for “solar installations in partnership with Alternative Power Solutions.” Mundo CEO David Lee reports that his company’s interest
On the second day of the SAM (Semaine Africaine de la Microfinance) conference, Godwin Ehigiamusoe of Nigeria’s LAPO discussed the needs and expectations of small and medium-sized enterprises (SMEs). He explained that they generally are sensitive to price and prefer not to post collateral. Loan sizing and duration are key. From a lender’s perspective, SMEs need to get their records out of their heads and onto paper (if not into digital form). The Central Bank of Nigeria has six Entrepreneurship Development Centers at which business owners can get assistance with business plans and other support.
Mr Ehigiamusoe explained that LAPO became involved with SME lending as its microenterprise clients grew. Likewise the staff of LAPO was in need of capacity development to serve their clients’ evolving needs. LAPO’s Sufen loan program is designed to identify female entrepreneurs with high growth potential and
After Tuesday’s sessions at the the SAM (Semaine Africaine de la Microfinance) conference, Olivier Massart, the General Manager of ADA, and Eric Campos, Managing Director of the Grameen Credit Agricole Microfinance Foundation (GCAMF), signed an agreement to collaborate on their institutions’ service delivery to microfinance institutions. Mr Massart explained that the two Luxembourgish NGOs will work “hand in hand” in areas including the measurement of social impact. ADA specializes in technical assistance, and although GCAMF also provides technical assistance, it is a major local-currency funder of microfinance institutions (MFIs). Both institutions prioritize working with MFIs that serve people in rural areas as well as women in general.
Mr Campos told MicroCapital that a primary motivation for the collaboration is to reduce the workload for MFIs, which are often called upon to submit substantial amounts of overlapping data to funders and other interested parties. He also spoke passionately about how MFIs can maintain market share as fintech
Empower Generation, a US-based social enterprise that supports clean energy and women’s entrepreneurship in Nepal, recently
During the SAM (Semaine Africaine de la Microfinance) conference today, Willie Mzumala of Malawi’s Tapika Food Products described how he has grown his business over 13 years to employ 9 people year-round plus additional seasonal staff. However, he still is offered loans at interest rates as high as 45 percent. In addition to affordable financing, he sees a need for small and medium-sized enterprises (SMEs) to get help with marketing, getting international exposure and standardizing quality.
Richard Muteti of the Kenya National Federation of Jua Kali Associations repeated Mr Mzumala’s call for help with standardization and more affordable financing. Among other barriers to SME success, he cited lack of appropriately
The European Bank for Reconstruction and Development (EBRD), a UK-based multilateral development institution, is providing
Today at the SAM (Semaine Africaine de la Microfinance) conference, Laura Foschi of ADA addressed the question of “how to support enterprises as they make the transition from micro- to small and medium-sized.”
Rebecca Rouse of Innovations for Poverty Action (IPA), described how randomized controlled trials can help determine “how can we best create value, spaces and opportunities for small and medium-sized enterprises (SMEs) and SME growth.” For example, evaluating the effectiveness of a business training program is much more enlightening when
Italy’s MicroFinanza Rating (MFR) issued two microfinance institutional ratings during September. Palestine’s Asala Company for Credit and Development was assigned a grade of BB+ with a “stable” outlook, and Inkunga Finance of Rwanda was assigned a grade of
C-Quadrat Asset Management, an arm of Austrian fund manager C-Quadrat, recently informed MicroCapital that its Dual Return Vision Microfinance funds lent a total approximately equivalent to USD 31 million to unidentified microfinance institutions (MFIs) in five Asian countries, Bangladesh, Cambodia, India, Kyrgyzstan and Pakistan, as well as three Latin American countries, Ecuador, Mexico and
The Nigerian government recently issued NGN 1.6 billion (USD 4.5 million) to the National Women Empowerment Fund (NAWEF), a new funding mechanism that will provide women with 6-month, collateral-free loans of between NGN 10,000 (USD 28) and NGN 100,000 (USD 278). The borrowers will pay a 5-percent administrative fee, but
An entity managed by Switzerland’s responsAbility Investments recently purchased a stake of undisclosed size and price in Fawry, a mobile payments platform in Egypt. Fawry has 20 million customers, whom it enables to pay bills and make retail purchases via mobile phones, credit cards, automatic teller machines, accounts at 23 banks, and point-of-sale machines at 65,000
Juvo, a US-based company that offers lines of credit to individuals in emerging markets, recently raised USD 40 million from investors including New Enterprise Associates (NEA) and Wing Venture Capital, both of which are also based in the US. Juvo plans to use the funding to
Developing World Markets (DWM), a fund manager based in the US state of Connecticut, recently announced that
Event Name: Social Enterprise Conference – Leaders Taking a Stand: Social Impact in Turbulent Times
Event Date: October 6, 2017
Event Location: Columbia University, Lerner Hall, New York, New York, USA
Summary of Event: This event will explore how to enact social impact across
MicroCapital: How does micro-leasing compare with microlending?
Manuel Hörl: Microcredits do not fit the needs of every situation. Often, the borrower cannot meet the collateral or other requirements for receiving a loan. Micro-leasing can allow a farmer, for example, to pre-finance the purchase of a productive asset, such as a cow. The farmer receives basic training in handling the asset, and risk is mitigated by