Africa

This paper surveys the state of SME finance in sub- Saharan Africa. The authors use Enterprise Survey data from the World Bank to explore cross-country and cross-firm variation in the use of financial services. They document lower use of financial services by firms inside than outside Africa and by smaller and younger firms.

Chris Isaac, Director of Business Development at AgDevCo, describes a model for financing smallholder farmers to help boost their productivity and incomes.

AgDevCo is a social impact investor and agribusiness project developer, incorporated as a non-for-profit distribution, limited company in the UK. We invest patient capital in the form of debt and equity into early stage agribusinesses and act as promoter or co-promoter of greenfield agriculture opportunities. AgDevCo currently operates with locally managed subsidiaries in five countries in sub-Saharan Africa (Mozambique, Ghana, Zambia, Malawi and Tanzania).

Varied presentations during the Fin4Ag Conference highlighted that several Africa countries have come up with initiatives that seek to promote inclusive financial service provision to facilitate the equal participation of women and Small and Medium Enterprises (SMEs) in economic development. They have established institutions, provided deposit mobilisation and loan disbursement facilities, which enable women to easily access funds. Importantly, some of these facilities also offer special products for women, including the provision of special loans for household utility and business activities.

Umati Capital, founded by Ivan Mbowa and Munyutu Waigi, leverages technology to provide innovative supply chain financing to SMEs who supply larger entities. Recognising the cash flow challenges faced by dairy farmers upon delivery of milk, this platform has been proven to alleviate this burdensome situation by ensuring farmers are paid within 48 hours of delivery and buyers repay Umati Capital within 60 days. Farmers can request loans, for varying purposes, in two ways, by sending an SMS (mobile money platform) or by having the Clerk at their Cooperative request a loan from Umati Capital on their behalf.

Last month, GE announced the launch of a 200 million rand (USD 18.7 million) fund for South African small and medium enterprises. This fund is part of a broader pan-African engagement which will inject more than 5 billion rand (over USD $467,000,000) into the continent. The fund will combine technical and general business development services and financing to build a more competitive cadre of local suppliers long-term. Early stage to mature SMEs that fit within the GE supply chain will be eligible for training, support and funding.

Agrilife is a cloud-based technology platform designed to use mobile phone and web platforms to enable groups of smallholder farmers as well as other agriculture value chain actors to access financial services, markets and other services. Agrilife was developed by Mobipay Kenya Limited in 2012 to address the challenge of a smallholder dominated African agriculture sector that is largely excluded from formal agriculture finance and product markets. Working with groups of smallholder farmers can have both positive and negative consequences, but the Agrilife platform has taken advantage of the group concept for a cost-effective launch.

Mobile financial services - often called mobile money - are a high priority for many mobile operators, financial institutions, technology firms, and governments. In regions where financial inclusion is limited, such as sub-Saharan Africa, mobile money promises a lower-cost, more scalable alternative to traditional banking. Yet despite high interest levels in the markets of sub-Saharan Africa, there have been few success stories to date.

From the moment M-PESA launched in Kenya in 2007, Africa was heralded as the undisputed leader in the innovation and adoption of mobile payment services. Today, more than 17 million Kenyans use M-PESA, and in 2013 a full quarter of the country’s GDP passed through the service. However, recent data are beginning to pose the question; is Africa still leading the global mobile payments innovation race?