4
SCOPING AND ASSESSMENT REPORT – MSME ACCESS TO FINANCE ECOSYSTEM IN AFRICA
There are also a number of threats that MSMEs are facing because of the impact of climate change, e.g. prolonged droughts in southern Africa affecting both water supply and hydro-electric power. Access to finance would help build the resilience of these affected MSMEs to the deal with the impact of climate change. Job creation is one of the major challenges facing Africa in the coming years. An estimated 450 million young Africans will be joining the labour market by 2050, presenting a real challenge for the continent.8 For Africa to accommodate these job entrants and to achieve its human capital potential, a vibrant private sector is required. Countries on the continent can build on the already substantial contribution of MSMEs in the private sector by active support and further developing the enabling ecosystem for MSMEs, with access to finance ecosystem as a key component. While there has been significant progress in the last decade to establish and enhance this ecosystem, much still needs to be done to enable MSMEs in Africa to drive the required economic progress.
PRINCIPLES FOR AND ELEMENTS OF MSME ACCESS TO FINANCE ECOSYSTEMS Creating an enabling environment for the growth of MSMEs has been a major focus of international development agencies and groups for well over a decade. The G20’s GPFI work has consistently focused on SME finance; the OECD has published extensively on most aspects of MSME development; and the World Bank Group, including the IFC, have made significant contributions to describe the framework and enabling ecosystems for MSMEs, including access to finance. The GPFI/IFC document SME Finance Policy Guide9 proposed a framework and highlighted some specific elements within this framework. It has served as the G20’s guideline for SME access to finance, with further development over time. The framework is as follows: > Regulatory and Supervisory Frameworks > Financial Infrastructure > Public Sector Interventions > Women and SME Finance > Agri-finance for SMEs Some of the aspects highlighted in the framework included enabling alternative forms of finance, the importance of the payment system for SMEs and focusing on improving SME capacity. The G20/OECD High-level Principles for SME Financing10 expands this framework. The G20 Finance Ministers and Central Banks Governors requested the OECD, together with other relevant international organisations, to develop voluntary high-level principles on SME financing to provide a framework for government action on SME finance.
8 Proparco (2019), SME Finance in Africa – What’s New; 9 IFC (2011), SME Finance Policy Guide 10 G20/OECD (2015), G20/OECD High-level Principles for SME Financing
