It’s not just about fresh capital for Africa: it is about deployment
April 18th, 2020 – There has been a drive to create new funding streams to arrest coronavirus impact on the continent. But delivery systems are critical to ensure the money gets to where it is needed.
Of the many aspects of the COVID-19 virus that unites the world’s developed and developing countries, including the world’s least developed countries (LDCs), one critical unifying aspect is the challenge of supporting and capitalizing small-and-medium sized enterprises (SMEs) to weather the storm.
Today, SMEs in developed and developing countries are contending with slowing domestic demand, with the collapse of economic activities due to the COVID-19 pandemic raising existential questions.
No matter the country or market, the overwhelming likelihood is that the majority of businesses are SMEs, that SMEs are the leading generator of all net new jobs, and that they are driving innovation in critical growth sectors. Of course, Africa is no exception.
African SMEs comprise 90% of privately-owned businesses, employ 70% of the continent’s workforce, and account for 45% of new jobs. Most importantly, African SMEs are advancing solutions in practically every sector—including financial inclusion, clean energy, digital tech, and mobile health.
But this is where the shared experience largely ends between developed and developing countries, including African developing countries and LDCs. SMEs in wealthier nations are substantially more likely to access the kind of capital that can serve as a lifeline in the context of COVID-19—from bridge loans, to emergency funding, to performance-based SME grants.
Written by The Africa Report
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