Connecting Borders & Building Synergies - Role of SMEs in economic growth & development of Africa.

Africa has massive potential and is on the cusp of exponential growth with the youngest and most resilient population in the world and some great intercontinental initiatives like AfCFTA, COMESA, PAPSS

Small and medium-sized businesses (SMEs) are the lifeblood of Africa’s economy. They are responsible for more than 80% of the continent’s employment and 50% of the GDP, according to the World Economic Forum.

The African Continental Free Trade Area (AfCFTA), a single, continent-wide market that unites 54 countries, offers significant opportunities on the continent. Among its aims are to scale African businesses through the integration of regional value chains and to increase intra-African trade by 52.3% by 2030.

The private sector financial institutions and policymakers working in partnership with the AfCFTA can open expansion and growth opportunities for SMEs.

Potential notwithstanding access to finance remains a critical challenge to SMEs. SMEs in Africa in general face the critical challenge of navigating the complexities of digital transformation, and the expertise to leverage new technologies hence limiting their ability to transform, grow, and stay competitive in a fast fast-changing global environment. Complex regulatory structures can be equally daunting for SMEs requiring understanding duties and tax structures across countries and industries though COMESA and AfCFTA facilitate this journey. ESG & sustainability is a big one, majority of the SMEs lack the expertise to wade through this & transition to more sustainable business models. The majority of SME business owners would also lack connections to business leaders who can provide guidance and support to grow.

Banks & Financial institutions are uniquely positioned to empower SMEs to overcome these challenges. Multinational financial institutions and banks are perfectly positioned to help SMEs capitalize on new ideas and opportunities through their comprehensive regional networks and ecosystems. They offer access to insights, best practices, and networking opportunities fostering collaboration.

Multinational banks have a large network of ecosystem partnerships that play a crucial role in helping SMEs tackle critical challenges. Most SMEs in Africa lack the awareness and deeper understanding of the nitty gritty of COMESA and AfCFTA and how they can benefit from these, banks can support, educate, and bridge this gap.

Majority of the SMEs face a significant challenge in integrating different systems and software applications including accounting, inventory management, HR, and CRM which can lead to data silos and inefficiencies. Banks can help SMEs build on the synergies through various ecosystem partners.

Beyond these challenges, banks play a crucial role in connecting SMEs to their ecosystem partners and offer bespoke credit and cash management solutions . Equipping SMEs with the right solutions and value-added services in their business journey can surely accelerate the development of Africa and help this beautiful continent gain its rightful place on the global stage.