Transcript SSCG – 19th February 2015

SSCG –
th
19
February
2015
What are key drivers of SME’s in Africa?
Africa is growing
It is no longer the ‘ forgotten’ continent
Investment is being attracted
Africa’s trade is diversifying
Africa is joining Global Supply Chains
What attracts business to Africa
Where might UK SME’s look for business
in Africa?
Mobile money and banking
 Mobile money platforms have made it possible for anyone with
a mobile phone to send and receive money, as well as pay for
goods and services. Kenya’s M-Pesa service, operated by
Safaricom, has been a leader in this field.
 Kenya was the birthplace of mobile banking when M-Pesa was
introduced in 2007 It transformed the way business is done. MPesa can be used for paying taxis, paying duties on import
shipments or paying a friend. It also means people carry less
cash, which can lead to a reduction in crime – as such it has
boosted enterprise and allowed those with little capital base to
enter markets
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The land line was not only service to be
bye-passed
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Technology is also transforming the traditional banking in
Africa. An example of this is in Uganda. Banks are now
differentiating themselves through what they can do in
terms of automation. They are constantly encouraging
electronic banking and incentivising customers to do so.
A similar trend is playing out in Mozambique where more
and more people are banking online. The main gamechanger in Mozambique has been the higher penetration
of mobile and internet, which has been extended to rural
areas over the past two years. Mobile is still the main
source of connection to the internet and the world.
There is more…
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Africa is beginning to like on line shopping. According to
McKinsey & Company, e-commerce could account for 10%
of retail sales in the continent’s largest economies by
2025. By comparison, online retail in the US already
accounts for around 9% of total retail sales.
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The Uganda community is now more versed in online
shopping - DHL we are getting numerous requests to
transport goods that have been purchased online
Education and Training
Greater internet connectivity in Burkina Faso is transforming
education – the emerging middle are now accessing online
programmes offered by universities and business schools.
Rwanda wants to offer similar levels of IT to all school children
as that of France by 2017.
 The Gambia - the continuous growth of technology has changed
the education sector by easing access to high-quality
knowledge.
 Connect Gambia-Vision 2020 initiative by electronics
manufacturer RLG that aims to provide a tablet for every
Gambian student from primary to university level.
 Look on Face Book at E-Learning in Africa

Efficiency and market broadening
Technology is allowing companies to operate more efficiently. For
example, in The Gambia, local businesses are benefiting from better
productivity, networking and cost management – that access to distance
learning programmes and domestic based training organisations have
introduced.
 The majority of Angolan companies are now connected to the internet this gives local firms access to global opportunities, the ability to work
closer with their customers and the use of tools and applications to
improve their businesses.
 In some cases greater internet connectivity is driving new industries, such
as in Mauritius where undersea communications cables have spawned a
thriving business process outsourcing (BPO) sector - a well-developed
connectivity network, linked to the world through the South Africa Far
East and Lower Indian Ocean Network cables. This has enabled Mauritius
to develop its ICT
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Banks are changing their investment
focus
It used to be lucrative for banks to target transnational firms,
but the transnational firms have been scaling down their
operations in Africa especially in manufacturing. It was felt by
some that transnationals were very price sensitive and lacked
loyalty to banking relationships. Banks today are now focusing
more and more on developing relations with indigenous SME’s
and/or their external partners.
 SME banking has its own challenges such as information
asymmetry and lack of, or inadequate, collateral. That’s why
institutions such as the AGF(The African Guarantee Fund) has
been launched to assist with financial guarantees and capacity
development assistance through which banks could devise
alternative and suitable credit appraisal techniques for SMEs
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AGF
partnership with banks will help scale up lending
activities to SMEs. As the SMEs benefit and grow, they will
create job opportunities and foster economic growth in their
countries. This will also solve the problem of youth
unemployment in Africa.
 Whereas foreign investment is increasing in Africa by virtue of
the continent having become the next economic frontier, the
types of investments we are seeing are of the labour saving
technology type and thus with very minimal ability to create
jobs. That is why we should encourage our SMEs to benefit from
opportunities associated with Africa being the next frontier,
through banks leveraging AGF’s facilities in scaling up their
operations in the SME space
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‘’Our
The case of Liberia – despite Ebola
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The IFC (International Finance Corporation – World Bank) has worked
with Liberia’s Central Bank and other stakeholders to establish
secured transaction laws to support the collateral registry, greatly
expanding access to finance in Liberia
It also announced it would help establish a collateral registry system
in Liberia, which will allow SMEs to obtain loans using movable assets,
such as equipment or vehicles, for collateral.
The recent gains made by Liberia’s smaller businesses do not disguise
the fact that challenges remain. Access to power and financing remain
especially difficult. The country’s skilled workforce is small. For these
reasons, IFC and the World Bank will continue to support private
sector improvements in Liberia that lead to job creation, increased
opportunity, and economic growth
Conclusion
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Some of the fastest growing economies on the planet in in
Africa
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A business friendly climate in being promoted
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An increasing number of governments are focusing on collateral
support, training programmes, whilst multi-national assistance
is being offered to build the infrastructure required to support
both an increase in domestic business levels and the expected
growth in online exports
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Yes, it’s in its initial stages but as you will note from the range
of countries selected for this brief overview the number of
countries now promoting SME’s is growing – fast!
For further details
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Please contact me on:
Email – [email protected]
Phone – 07531053582
African Research Associates
Thank You