AFRICAN SME’S
Listening To The Needs
Of African Small And
Medium Enterprises
By Sid Boubekeur
Synopsis
The Story
for companies.
For decades, a combination of governments
and development organisations in Africa
have responded to calls to assist small
and medium sized businesses (SMEs)
by launching an array of training and
capacity building projects. These, while
often useful, did not always generate the
expected results and, in the vast majority
of cases, frustrated the small enterprises.
The major problem voiced by SMEs for
years has been the lack of access to credit
finance, or subsidies, that would have
alleviated their financial burdens. These
requests did not receive the attention they
deserved. And even when projects focused
on access to finance were developed, SMEs
have had no guarantee of getting funding.
Ironically, it has taken the Covid-19
pandemic to prompt governments and
development banks to inject direct
funding into SMEs. African governments
reacted quickly to the crisis, in order
to limit its negative impacts on the
economy and the population. Actions to
assist SMEs have focused on the need to
reduce their financial burden, in a bid to
lower the risk of a series of bankruptcies
and the resultant increase in numbers of
unemployed people.
African states that ultimately succeed
in building dynamic private sectors will
be those that can maintain the measures
currently offered to SMEs within the
framework of Covid-19. This would
build a network of SMEs able to focus
on their operations and on value chain
development. In short, the pandemic is
teaching us to listen more closely to the
needs of small businesses.
The current health crisis which has
affected nearly all nations around the
globe requires urgent solutions. This
article shows how African governments,
driven by a major event, were able to react
very quickly to limit the negative impacts
of this health crisis on the economy
and the population. Paradoxically, the
measures taken recently have been
demanded for decades by the private
sector, without success and, international
aid agencies, which had been calling for
similar solutions, responded with studies
and training of SMEs, while African
entrepreneurs who had for many years
pointed out that financing is their major
problem were largely ignored.
Limit Of The Conservative
Approach To Development
As some recent macro-economic studies
published recently by Africa Union
Commission (AUC), the World Bank
(WB) and International Monetary Fund
(IMF) focused on the impact of Covid-19
on Africa economies, other sector studies
determined the impact of Covid-19,
and identified the challenges faced by
businesses during this difficult period. To
the extent that macro-economic studies
can influence governments to adapt
their monetary and fiscal policies and
to improve their business environment,
sector studies are simple observations,
focusing on the difficulties experienced by
companies before the onset of Covid-19.
Consequently, sector studies do not offer
any guidance on designing comprehensive
emergency measures for businesses, at
best they lead to capacity building actions
Undoubtedly, strengthening the capacity
of companies in the field of management,
financing, operations and marketing
is not only desirable, but often times
necessary. But the important question is,
how many SMEs that have been formed
over decades, have improved performance,
allowing them to play a greater role in
the value chain, thus being able to access
new markets, modernize and sustain their
investment? Moreover, how many SMEs
became globally competitive and have
been integrated in outsourcing activities
offered by larger companies? In reality,
capacity building solutions applied during
the past decades have led to very modest
results and frustrated many SMEs.
At a personal level, my whole career has
involved designing and implementing
capacity building initiatives for SMEs. It
was at the end of my mandate as Head
of the Centre for the Development of
Enterprise (CDE) Regional Office for
Southern Africa that I became aware of
the obsolescence of this approach. On the
occasion of my farewell in April 2016,
an entrepreneur we had supported for
three years in the field of management,
operations and marketing of his products,
and who had become a reference for the
other companies that we assisted remarked,
"Your organization has done a great job.
In your own words, our company is now
stronger, thanks to the various training
courses we have benefited from. What do
we do now?'' His response was shocking
to me. At that point, I understood that
we did not meet his needs, and that we
indirectly circumvented them.
I also recall the reaction of an entrepreneur
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