Micro, Small and Medium Sized Enterprises (MSMEs) are key drivers of job creation, economic diversification and innovation, especially in developing countries whose economies are frequently based on natural resources. Despite their critical role, MSMEs face a broad range of constraints that smother their potential. These include poor hard and soft infrastructure, unhelpful environments, as well as a lack of skills, experienced mentors and easily accessible markets. Of primary importance, however, is that access to finance for MSMEs is severely restricted in many developing countries. The total unmet need for credit by all formal and informal MSMEs in emerging markets today is significant – in the range of $2.1 trillion to $2.5 trillion, according to the IFC and McKinsey.
One area for focus is building the capacity of local financial institutions to provide finance for SMEs. CDC, the UK’s development finance institution (DFI), whose mission is building businesses in Africa and Asia and creating jobs, works with over 200 financial institutions in 30+ countries to make SME finance more easily available. In Uganda, CDC is this year celebrating the 50th anniversary of DFCU, which it co-founded with the Government of Uganda in 1964. DFCU has grown to become one of the country’s largest banks and a leading provider of finance to small businesses.
To coincide with this anniversary, Business Fights Poverty in partnership with CDC is leading a discussion on how best to help small businesses to grow.
Key questions for the discussion include:
Welcome to this live written discussion with CDC. We're joined by a great panel to explore how to scale support for small businesses. The discussion forms part of a one week series of articles (click here).
Let me start by asking our panel to introduce themselves.
Hello, I'm Laura French from the African Development Bank working in Africa SME Program
Hi, I'm Alex from CDC, happy to be here with you today and looking forward to a great discussion.
Hello, I'm Matt Gamser from the International Finance Corporation, where I run the SME Finance Forum for the G20 countries' Global Partnership for Financial Inclusion.
Laura - can you tell us a bit about your work at the ADB?
I'm Gerry Boyle of Care INternational, standing in for my colleague Gianluca Nardi who is unable to join us - apologies for that. I am Care's Private Sector Policy Adviser
My name is Robert Zegers. I work with AfDB on SME related issues.
Since I'm the only person here so far, let me ask myself a tough question. Why are small businesses smaller in Africa than anywhere else?
Alex - good to have you on this panel.
Ok - let's kick off with the first question...
Q1: What are the biggest constraints currently facing small businesses, particularly in relation to accessing finance, and where are the most significant gaps in terms of the provision of enterprise support?
Thanks for joining Gerry.