Africa continues to be the World’s largest field for investment and capital development.
Opportunities for development continue to spring up now that the continent has the world’s largest free trade area agreement which will become operational in 2020 with an estimated 1.2 billion people market space.
This is also becoming an attraction for countries like France with the Agence Francaise de Developpement through its subsidiary Proparco setting a minimum of €2.5 billion to support the scaling up of SMEs and Start-ups under the Choose Africa initiative.
Despite being one of the critical pillars of Africa’s economy, MSMEs continue to struggle in accessing the needed capital to grow.
According to the World Bank, the International Finance Corporation (IFC) estimates that 65 million firms, or 40% of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year, which is equivalent to 1.4 times the current level of the global MSME lending.
In a bid to shore up this gaping deficit, the Proparco Group is aiming at becoming a leader in providing the solution to these businesses.
Revealing details of the financial solutions to SMEs and start-ups in Accra, Deputy CEO of Proparco, Djalal Khimdjee said they are working to increase capital injection on the continent from 2.5 billion to about 3 billion euros.
“With the backing of AFD group, this initiative will harness all of the resources of the AFD Group to provide unprecedented support for African small business. All of the resources of AFD and Proparco will be mobilized in order to support African businesses at various stages of their development”.
He adds that, “2.5 billion euros will be committed to accelerate the growth of African business in Africa by the year 2022. Breaking down the areas where the capital will be injected Djalal Khimdjee said 1 billion Euros will be made available to equity investment to be mobilized for African start-ups and MSMEs with a further 1.5 billion euros to be used to facilitate access to credit for MSMEs via a wide range of local public or private financial institutions.
It is expected that a total 10,000 African SMEs are intended to benefit from the Choose Africa Initiative.
Zeroing in on the Ghanaian advantage Investment Officer for Proparco, West Africa, Guy Orsot disclosed that a 1 day programme had been scheduled to aid in not only providing finance for start-ups but also to teach them good corporate governance to help them reach international standards. He adds, no specific amounts are assigned to the start ups.
“We rely more on the financial institutions which are on the ground and know what the business need. So if the banks decide to enter into a market, we discuss with the banks and provide them tools by which they can help startups within this new target”
French Ambassador to Ghana, Anne Sophie Ave on her part said the investment is a sign that France is committed to doing business with Ghana.