Small and medium enterprises constitute the majority of private businesses, and account for the bulk of job creation in most of Sub Saharan Africa. Strengthening smaller enterprises, helping them to expand through better skills and improved management, and assisting them to access markets and raise financing, are key priorities for IFC in Africa.
Since 2005, IFC, working with the African Development Bank, and the governments of Denmark, the Netherlands, and Norway, has been implementing the SME Entrepreneurship Development Initiative. It aims to develop and support entrepreneurs in Africa. The initiative, which is managed by IFC Advisory Services—through the Private Enterprise Partnership for Africa—is part of IFC’s broader strategy to support the development of small and medium enterprises in Sub Saharan Africa.
"Small enterprises face many challenges. Besides capital, they need access to skills, technology, and markets," explains Oumar Seck, IFC Operations Officer. "The SME Entrepreneurship Development Initiative has been providing hands-on assistance to entrepreneurs across Africa to help them overcome the operational challenges in the market."
More Than 30 Countries
Working in over thirty countries in Africa, the program has trained nearly 10,000 entrepreneurs, assisted more than 2,000 firms, and raised over $50 million in financing for small and medium enterprises in the region.
A significant number of the initiative’s projects are in countries that are recovering from conflict. "In conflict affected countries, IFC programs like the SME Entrepreneurship Development Initiative are so more important because this is where the most work is needed to help revive enterprises impacted by conflict and create new ones," says Bernard Chidzero, General Manager, IFC Advisory Services in Africa.
SOAPEC Guinea Bissau is one such company. Founded in 1992, SOAPEC was a thriving paints and chemicals plant. However, following a civil war in 1998, the company lost all its assets including buildings, equipment, and vehicles. The initiative has assisted SOAPEC’s investors to develop a feasibility study and business plan for rebuilding the plant. The company hopes to raise $1 million in financing and will create more than 80 jobs, once the plant is back in production.
Besides working with individual firms, the SME Entrepreneurship Development Initiative work also extends to supporting small business membership organizations and business development services providers.
Sustainable Support Base
IFC, through the SME Entrepreneurship Development Initiative, has supported 33 business associations in Africa, and trained over 460 business consultants. Our goal is to build a sustainable support base for providing ongoing support to small and medium enterprises.”
Support to business membership organizations aims at equipping them with the skills to advocate for a better business enabling environment, and to broker business development services for their members, while managing their organizations in a sustainable manner.
In Burundi, for example, the initiative is providing assistance to strengthen the national association of women entrepreneurs, advising on the creation of a women’s microfinance institution, and providing association members with entrepreneurship skills training. Over 100 Burundi women entrepreneurs have received support from IFC, through this initiative.
In Madagascar, a project supported by IFC, helped 12 of the country’s litchi fruit exporters to gain international certification, which enabled them to double their annual exports to the European Union to $42 million within one year. Another sector-wide project in Kenya, is supporting the country’s coffee exporters to gain international certification for their coffee, which will enable them to penetrate the international premium coffee market, where prices are up to 1.5 times higher.
IFC is looking to build on the SME Entrepreneurship Development Initiative model by focusing more on interventions that cut across sectors, particularly those that have high job creation and export development potential.
"Sector-wide programs can reach thousands more small businesses, and deliver greater impact, in terms of export earnings, jobs, and new investment," says Chidzero.
