Access to finance remains a major barrier to the growth of private enterprises in Africa. Billions of dollars in capital, credit guarantees, capacity development, and other interventions have been channeled into bridging this financing gap, especially for micro-, small-, and medium-scale enterprises, or MSMEs, but the challenge persists.
The International Finance Corporation’s estimate of a $331 billion funding gap for African MSMEs gives us an idea of the scale of the challenge. In Nigeria, the unmet demand for credit stands at $32.2 billion, according to IFC, while in Kenya, only about 16% of its MSMEs have access to credit.
The barriers to financing for African MSMEs are many. Demand-side factors such as limited financial literacy, poor business management practices, and inadequate financial records and documentation have hamstrung their ability to attract and effectively leverage funding.
About the author
Chinedu George Nnawetanma
Chinedu George Nnawetanma is a development specialist with experience that spans SME finance and advisory, local economic development, youth entrepreneurship development, digital inclusion, and green finance. He is passionate about the economic growth and development of Africa and he has designed and led projects, programs, and partnerships that have directly impacted thousands of businesses and youth on the continent.
