Charles Robertson, global chief economist of Renaissance Capital has disclosed the reason many Small and Medium-sized Enterprises (SMEs) in Africa are struggling owing to their inability to access affordable financing.
Robertson stated this while responding to a question on the challenges of running small-scale businesses in Africa on the 2nd day of the Africa Business Conference 2022- Africa Recovery organised by BusinessDay Media Limited at the Grand Ballroom, Eko Hotels & Suites, Victoria Island, Lagos.
“Small companies hardly access loans from financial firms, while the big firms have these financial companies running after them,” he said.
However, Peter Quartey, director, ISSER, the University of Ghana disclosed that supervision and planning is vital to the survival of SMEs in Africa.
Quartey who spoke virtually from Ghana explained that the business environment in Africa is quite challenging and very hostile no doubt, but he stressed that with hard work and perseverance there are prospects for those in the small and medium business groups.
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Nevertheless, he cautioned investors in small and medium businesses to desist from borrowing money from financial firms to start, but if they must ask for loans, they must seek financial aid from closed family members first; and from traditional banks to avoid huge interests on such loans.
“Work hard and persevere, with time and proper planning entrepreneurs in SMEs in Africa will certainly thrive,” Quartey said.
Quartey encouraged African SME entrepreneurs to gear up rather to proper planning and be sure their businesses are well monitored which according to him will help their enterprises prevail the harsh business environments obtainable in the continent.
Experts believe that SMEs are major platforms by which many African countries can become developed owing to their existing contribution and capability to further drive the entire African continent to developed status.
According to Charles Yeboah Frimpong, “SME is an engine of social and economic development in Africa”.
He estimated that SMEs make up 70 percent of Ghana’s GDP and 92percent of its businesses. They also make up 91 percent of formalised businesses in South Africa and 70 percent of the manufacturing sector in Nigeria.
Many African economists argue that SMEs are not only the engine of the economy but can also serve as a stimulus for economic diversification in other sectors of the economy. SMEs, they say, with innovative technology have the potential to internationalise and enter many foreign markets both within the continent and globally.
