With funding needs estimated at $ 331 billion, small and medium-sized businesses across the continent (SMEs) are struggling to find loans. With the emergence of crowfunding, the horizon could clarify, but for the moment, on the continent, the absence of a regulatory framework is delaying the development of this sector.
Africa has nearly 44 million small and medium-sized businesses (SMEs) that have difficulty accessing credit. Estimates suggest that their funding needs are estimated at $ 331 billion. Despite its obvious growth, the traditional banking system has shown its limits to meet the requirements. In fact, 80% of SMEs are struggling to gain access to credit. A situation that constrains the continent's development potential, but that new forms of funding are capable of solving. This is clear from a panel organized yesterday at the African Funding Forum in Africa organized by Africa and Mediterranean (Fpam) Participatory Finance. According to Fpam co-president Thameur Hemdane, "crowfunding or crowdfunding is an important tool for financing the continent's development." Born in Europe in 2010, crowfunding has already proven its worth. Mr Hemdane gives the example of Great Britain where this so-called participatory funding is developing very significantly. "This represents more than 20% of the loans to the companies and 17% of the companies' own funds. It is not just an epiphany or a move on the edge of the financial system, they are full financial actors," says Hemdane. The funding instrument for culture, civil society and all types of projects, especially the impact projects that pose very important societal and climate challenges, can provide financing solutions through project funding, and smes, says Hemdane.
The forum organized by Fpam in collaboration with Jokkolab aims to promote good crowfunding practices on the continent. According to panelists, this means creating a regulatory framework. In this chapter, Laurent Gonnet, World Bank Finance Specialist, indicates that discussions are currently taking place with the Central Bank to develop a regulatory framework. It has to be said that the stakes are big. Indeed, the digitization of the continent makes it possible to bring large profits to the financial sector on the continent. According to studies, by 2025, 400 million new people will be financially included through the mobile. This will generate 758 billion new deposits and 448 billion dollars in loans.
Today, there are actors who are active in the field. If in the West of Africa, the new Fintech is primarily active in terms of payment in the south and east of the continent, the mobilized funds are mostly used to finance the investment. Jean-Louis Traore from Innogence Consulting, a Cote d'Ivoire company, cites the example of Nigeria, where Farmcrowdy's platform has helped support over 7,000 farmers through participatory funding.
Funding the lockout
If the movements are funded so badly on the continent, the motives are multiple. But, according to Mr. Gonnet of the World Bank, it is necessary to face some bottlenecks. It cites the solvency problems of SMEs and the bankruptcy management system as well as the guarantee issues. In this context, it notes that funding is rather directed at wealth owners and therefore suggests increased involvement of public authorities by creating guarantee funds. For Madame Valérie Dabady of the African Development Bank (Bad), it is particularly important to accept that funding is just a part of what they need. "We have to change the way we do things," she says.