By Dhruv GandhiA new report released this month by the European Investment Bank (EIB), Banking in Africa: Delivering on financial inclusion, supporting financial stability, highlights progress in financial inclusion and banking expansion in Africa. The report documents increasing financial inclusion in sub-Saharan Africa led by the adoption of mobile payment services across the continent. In 2017, 43 percent of the region’s population had access to an account (including mobile money accounts) up from 23 percent in 2011. Accounts at financial institution have grown more slowly, rising from 23 to 33 percent of the population during 2011-17.
The report also documents the current financing landscape for small and medium-sized enterprises (SMEs) and the challenges faced by financial institutions in extending credit to SMEs using data from World Bank Enterprise Surveys and a 2018 EIB survey of banks in sub-Saharan Africa. As Figure 1 shows, 26 percent of survey respondents between 2011 and 2017 in sub-Saharan Africa listed access to financing as their biggest challenge, making it the most cited obstacle for their business. Electricity is second at 17 percent and competition from the informal sector is in third place at 11 percent. This limited access to finance is further highlighted as almost three-quarters of surveyed SMEs were financed by internal funds and only 10 percent have used bank finance.
Figure 1: Biggest business obstacles for SMEs in sub-Saharan Africa
For banks, as Figure 2 shows, lack of collateral and high default rates are the main challenge in lending to SMEs. Credit Information gaps and high cost of monitoring borrowers together are cited by 16 percent of banks in the survey. Outside of SME specific constraints, increasing bank lending to the public sector in recent years has crowded out private sector lending in some countries, affecting SME lending in particular.
Figure 2: Main obstacles to SME lending
The report suggests that improving managerial capacity and access to credit information are areas where development partners can play a role through training and technical assistance. Helping SMEs improve financial reporting can increase their chances of getting bank credit. Further, well-developed credit bureaus can increase access to financing and lower interest rates for borrowers that are otherwise unable to demonstrate good creditworthiness, by making their information readily available to lenders.
Improving learning while developing future women leaders in Tanzania
Friday July 26, 2019
By Patrick Hannahan, Barbara Chilangwa“It promotes the change that comes from within.” This was how 28-year-old Stumai Kaguna described the impact that the Learner Guide program had on her life. An initiative of the Campaign for Female Education (CAMFED), the program promotes life skills development …
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Rektor: Tambah Dua Guru Besar, Jadi Kado Akhir Tahun untuk UNS
Tuesday December 11, 2018
UNS – Bertambahnya dua guru besar di Bidang Ilmu Kesehatan Masyarakat dan Bidang iImu Obstetri dan Ginekologi pada Fakultas Kedokteran (FK) ini menjadi kado terindah untuk UNS di akhir tahun 2018. Dua guru besar tersebut yaitu Prof. Dr. Endang Sutisna Sulaiman, dr., M.Kes dan Prof. Dr. …
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