Low access to funding has been singled out among persistent challenges stifling growth chances for African Micro Small and Medium Enterprises (MSMEs).
Other challenges affecting MSMEs growth in the region include gender bias, color bias, collateral requirements, lack of infrastructure, inequality, product mismatch, capacity building criteria, lack of Information, skills gap, risk factors, compliance issues, bank delays, and inadequate mechanisms.
This was observed at the end of a week-long African Union (AU) MSMEs Forum in Windhoek, Namibia last week.
In a communique issued at the end of a Design Thinking Workshop on Consolidating Best Practices across Africa, participants reiterated a call for empowering MSMEs.
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In the communique, the industry players call for concerted efforts towards addressing the challenges, fostering an inclusive financial environment, and enabling enterprises to contribute more effectively to economic development.
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The proposed purchase order financing which allows businesses to obtain funds based on purchase orders they have received, rather than relying solely on their credit history or collateral.
“By adopting purchase order financing, African MSMEs can access much needed capital to fulfill orders, boosting their operational capacity and growth potential,” reads the statement.
They are also advocating expansion of use of products as collateral, enhanced formation of cooperatives, and ensuring preferential treatment for MSMEs in procurement.
The sector players also push for establishment of legal frameworks tailored to address the specific procurement challenges faced by local businesses in the region.
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In an interview on the sidelines, AU Commissioner for Economic Development, Trade, Tourism, Industry and Minerals Albert Muchanga said capacity building remains the pinnacle for growth of MSMEs.
“There are a lot of activities that we need to undertake to ensure that we create a very conducive environment for the operation of small and medium entrepreneurs. One of them is capacity building.
“There are also areas where the governments need to come and assist; this is access to finance. We are advocating to governments to come up with mechanisms to facilitate access to low-interest finance,” he said.
Ministry of Trade Director of SMEs Limbikani Kachiwaya said room for growth remains vast if industry players collaborate in their operations.
