Choose Africa; a French initiative accelerating growth of SME’s in Africa

By Steven Mulanda
France Government through its initiative ‘Choose Africa’ has launched 2.5 billion Euros to accelerate the growth of Micro, Small and Medium-sized Enterprises (SMEs) and entrepreneurship in Africa.

The initiative ‘Choose Africa’ fulfills the ambition of French President Emmanuel Macron dubbed Ouagadougou declaration to support African entrepreneurial impetus.

With ‘Choose Africa’, the AFD Group (Agence Française de Development and its private sector financing-arm, Proparco) aims to accompany SMEs and entrepreneurs at all stages of their development, from infancy to maturity. Nearly 10, 000 SMEs are targeted to benefit from this initiative.

The initiative to support SME’s was launched recently during French President Emmanuel Macron’s visit to Kenya.The initiative was launched at Sunculture’s offices in Lavington,Nairobi with senior government officiasl from Kenya and France in attendance. Jean-Yves Le Drian; French Minister of European and Foreign Affairs while addressing delegates in the company of Peter Munya, Minister East African Community and Northern Corridor Development, said that the reason the initiative was launched in Kenya is because it’s a good place for vibrant SME’s.

“We know the creativity of Kenyans as witnessed by the innovation of MPESA and other innovations. Not only Kenya but Africa at large is a continent with the highest proportion of entrepreneurs, with 20 percent of these young businesses offering new products or services. We know this will accelerate more growth,” said Jean-Yves Le Drian.

National Economic Survey report by the Central Bank of Kenya (CBK) indicates that SMEs constitute 98 percent of all business in Kenya. Start-ups, micro-,small and medium-sized enterprises play a crucial role in job creation, economic growth and innovation. In Africa, and other developing and emerging countries, SME’s account for 90 percent of formal businesses, create 60 percent of jobs and contribute to around 40 percent of GDP.

Despite this dynamism and the crucial role that small businesses play, lack of adequate and suitable financing remains their number one obstacle, and one that hinders entrepreneur’s ambition and curbs development potential.

Currently, it’s estimated that a paltry 20 percent of SME’s have access to bank loans and 87 percent of start up businesses do not have access to any funding. “To enable these small businesses to get off the ground, and to develop and to thrive, it is essential that they are given access to diverse financing solutions tailored to their specific needs and at all phases of their development. It’s on this regard that the 2.5 billion Euros will be shared into two phases. 1.5billion in credit lines to local financial institutions; dedicated to SME financing or guarantees to banks to share the risk on SME lending and 1 billion in private equity; either through direct investments in companies or indirectly via private equity SME- focused funds,” Jean-Yves Le Drian explained.

On his part Cabinet Secretary Peter Munya, thanked the French Government for the good gesture and elucidated that it was a solid foundation that the industry is growing in leaps and bounds. “This is a sector that President Kenyatta is really focusing on. The government has streamlined this sector since the session paper of 1992; Micro and Small Enterprises Act of 2002, vision 2030 and the Big 4 agenda. The blueprints on SME’s are clear with youth, women and people living with disabilities being the target to access more government opportunities. The government intends to formalize the sector from being an informal sector,” he said.

The government has formulated strategies to quicken the process of starting a business in favor of small firms. It has addressed SME challenges by enforcing legislation on local content for public projects-establishing ‘Buy Kenya, Build Kenya’ policies in public procurement, research and development support and increased funding to funds such as the Uwezo Fund.

The Uwezo Fund is a government fronted financial tool aiming to expand access to finances and promote women, youth and persons with disabilities.

According to Munya, more needs to be done especially on capacity building, access to information, mentorship, management and proper strategy implementation so as to allay jitters of business failure for start-ups.

During the function, Sylvia Kuria an SME and an organic farmer thrilled the attendants with her story of how she began her entrepreneurial journey. She began cultivating kale, Spinach, carrots on a half an acre in Limuru and selling the produce majorly to her neighbors and friends in their locality. “Within a short time I had more than enough and I had to think outside the box, and eventually began to transport and sell in the city raising a profit of 200 Euros per month,” she said.

Ten years down the line, she has grown in terms of her acreage from half an acre to 15 acres, opened an agro-vet and trained 40 farmer groups on how to convert their small pieces of land into a regular income generating basis thus being self sustainable.