The African Small and Medium Enterprises (SME) Program has been given a four year funding approval worth $125-million together from the African Development Bank (AfDB).
The Fund for African Private Sector Assistance (FAPA) which aims at supporting micro, small and medium enterprises (MSMEs) in Africa also granted a $3,98-million technical assistance package.
This programme will provide consistent lines of credit (LoCs), mostly in local currency, and technical assistance to targeted financial institutions, predominantly in low-income countries spread over all five African regions.
The SME Programme will avail important longer-term resources to many SMEs which will have contributed to job creation which is 45 percent growth, poverty reduction and inclusive growth on Africa which contributes to more than 33 percent GDP.
Some studies show that more than 70 percent of SMEs lack access to medium-longer-term finance, creating an SME funding gap of more than USD 140 billion in Africa alone.
60 percent of the available loans are for less than a year. Most of the financial institutions do not have enough knowledge and systems to assess and monitor SME projects they relay on collaterals.
The programme will benefit from the Fund for African Private Sector Assistance (FAPA) support that will give USD3.98 million to provide technical support to building capacities of the 25 participating financial institutions to improve their operational efficiencies.
FAPA is a multi-donor thematic trust fund, financed by the Japanese Government, the AfDB, the Austrian Development Bank and the Government of Austria, that provides grant funding for technical assistance and capacity building to support completion of the AfDB’s Private Sector Development Strategy.
This USD 3.98-million FAPA technical assistance grant for the AfDB Africa SME Programme is the highest amount approved in the history of FAPA.