The African Development Bank provides significant financial resources to reach small and medium enterprises (SMEs), including through its non-sovereign operations. In 2016 alone, the AfDB Board of Directors approved over US $400 million in new lending to financial institutions (FIs) for Africa’s SMEs.
AfDB’s funding is expected to help SMEs access new loans, enabling them to invest in expanding their productivity capacity and ultimately to grow their business, increase their revenues, create new jobs and play a key role in Africa’s inclusive growth story. However, financing is only one component of what is required to support Africa’s SMEs. Are we doing enough to help African financial institutions to better reach SMEs on an effective, efficient and sustainable basis?
This was the key topic of the Technical Assistance (TA) Learning Forum hosted by the Financial Institutions and Inclusion Division (PIFD1) of the African Development Bank on Tuesday, February 28, 2017 in Abidjan.
In 2013, the AfDB launched the Africa SME Program – a US $125-million envelope to provide smaller, local FIs with both financial resources and technical assistance. The Fund for Africa Private Sector Assistance (FAPA) provided generous support through a grant to support co-financing of TA and capacity building programs.
So far, in partnership with the Frankfurt School of Finance and Management, and with the funding from FAPA, TA needs assessments have been undertaken with 14 different institutions, spread across 12 different countries in Africa. Full TA programs have been provided to seven institutions in three languages – Portuguese, French and English.
Participants at the Learning Forum discussed approaches to identify TA needs, including through SWOT (strengths, weaknesses, opportunities, threats) analysis. They looked at key areas for TA interventions, such as SME market and business strategies, risk management, information technology and mobile banking and environmental and social management systems. Case studies from various countries were presented and lively debates were held.
This learning forum comes at a time when the Bank is operationalizing its High 5 priorities and seeking to expand its on-the-ground presence. Speaking at the event, Peter Ide, Chief Technical Assistance Officer, welcomed participants on behalf of the FAPA secretariat and donors, and noted, “This programmatic approach, linking investment and lending operations, is highly innovative and relevant to us in the context of the Bank’s new Development and Business Delivery Model.”