Categories: Business

AfDB approves over $800m for 3,000 women SMEs in Nigeria, others

Published by

3 years ago

The African Development Bank (AfDB) has approved over $800 million in investments for on-lending to 3,000 women Small and Medium Enterprises (SMEs) in Nigeria, and 22 other African countries.

The facility is also targeted at engendering policy reforms to foster inclusive and gender-responsive solutions for women SMEs.

This was disclosed by the Director General, Nigeria Country Department, Africa Development Bank, Mr Lamin G. Barrow in his remarks at the African SME Immersion Fund Roundtable event organised by Access Bank Plc. with the theme: “Enhancing the Capabilities of MSMES in Africa- the Roles of DFIs.”

Mr Barrow, who represented Dr Akinwumi Adesina, President of the African Development Bank Group at the Roundtable on the SME Immersion Fund for Africa, and spoke on the role of DFIs in enhancing the capabilities of Micro, Small and Medium Sized Enterprises (MSMEs) in Africa, said: “To date, over $800 million in investments have been approved for on-lending to 3,000 women SMEs in 23 African countries, including Nigeria; and Policy reforms to foster inclusive and gender-responsive solutions for women SMEs.

“Our Africa SME Programme will channel $150 million in funding to SMEs through FIs across Africa to enhance financial inclusion while also addressing barriers to SME funding. Through a Technical Assistance component, this Programme will strengthen the beneficiary FIs’ ability to serve SMEs”.

He highlighted the Bank’s support to enhance the capacity of SMEs and drive financial inclusion through access to credit, which includes providing an “array of instruments, including loans (Lines of Credit), guarantees and equity participation in Financial Intermediaries (FIs), including banks, SME-focused private equity and venture capital funds to provide catalytic financing for MSMEs in the productive sectors of the economy through on-lending arrangements.”

According to Mr Barrow, this approach leverages the comparative advantages presented by FIs, such as “country footprint to enhance regional integration; local knowledge (geographical, sectoral or market segments) and financial viability/ sustainability.”

He pointed out that in Nigeria, the Bank has 8 active LOCs targeting SMEs valued at $1.1 billion, and stressed that the AfDB “interventions have supported over 20,500 MSMEs and have contributed to the creation of over 440,000 jobs, with women and the youth accounting for 60 per cent”.

Mr Barrow stated that the Bank has also launched the Affirmative Finance Action for Women in Africa (AFAWA) as a flagship initiative to close the $42 billion access to finance gap for women-led and owned SMEs, and through AFAWA, the Bank will facilitate up to $5 billion in credit access to women SMEs by 2026.

He explained that this will be achieved by enhancing access to financial services by leveraging the LOCs, trade finance and equity participations to ensure that a percentage of these investments are targeting women-empowered SMEs and the AFAWA guarantee mechanism deployed in partnership with the African Guarantee Fund de-risks lending to women SMEs.

Also, by enhancing knowledge for financial institutions to develop products and services targeting women-led or owned SMEs, and at the same time provide capacity-building services for women SMEs to enhance financial literacy and managerial skills, thereby enhancing their bankability.

Mr Barrow said the private sector landscape in Africa is dominated by MSMEs that constitute the backbone of African economies, and through their investments, innovation and trading activities, they play a critical role in fostering inclusive growth and creating jobs.

He noted that in Nigeria, for instance, the MSMEs employ about 77 per cent of the workforce and are dominated by women who face greater challenges in accessing affordable finance and non-financial services, due to gender biases in property rights that limit their ability to collateralize their loans.

However, he observed that the growth of MSMEs has been constrained by many factors, including poor access to affordable finance, perceptions of high default risk due to key man risks, information asymmetries and other challenges related to their informality.

He asserted that as providers of term finance and other non-financial services, Development Finance Institutions (DFIs) have a crucial role to play in helping to alleviate the challenges faced by MSMEs in Africa.

Mr Barrow stressed that the African Development Bank, for instance, has prioritised support to MSMEs in its interventions across the High 5 strategic priorities.

“In line with the Private Sector Development Strategy (2021-2025) pillar on enterprise development, our Lines of Credit interventions are increasingly being more targeted to support the development of regional value chains and clusters, with strong linkages to MSMEs through off-taker and other support to de-risk the eco-system”, he further stated.

Mr Barrow reaffirmed the African Development Bank Group’s commitment to continue deploying its array of instruments, and leverage its initiatives and strategic partnerships to support the development of MSMEs in Africa.

To this end, he looked forward to engaging with Access Bank and other actors to consider support for the proposed SME Immersion Fund for Africa, which he hoped could build a strong partnership to drive inclusive and climate-resilient growth in the continent through strengthened and vibrant MSMEs.

ALSO READ FROM NIGERIAN TRIBUNE