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International workshop on Innovative Financing for Sustainable Small and Medium Enterprises (SMEs) in Africa - 2007

Small Grant

Keywords

Globalisation - International Trade - Poverty Reduction - Social Equity - Sustainable Development

Summary

Role of SMEs in African Economies and Challenges faced by them: SME sector is one of the principal driving forces for economic growth and job creation not only in developed but also in developing and least developed economies. This is particularly true for many countries in Africa, where SMEs and the informal sector represent over 90% of businesses, contribute to over 50% of GDP, and account for about 63% of employment in low income countries (UNECA 2005). Despite, SMEs in Africa face many obstacles including corrupt governance structures, unfavourable macroeconomic environment, debilitating physical infrastructure, and multitudes of administrative challenges. However, inadequate access to financing continues to be one of the most significant impediments to creation, survival, and growth of SMEs in Africa.

Gaps in Current Responses to SME needs in Africa: Recent years have seen a growth in number of SME-oriented programs and activities focusing on SME sector related aspects such as financing, capacity building, technology innovation, and globalization. However, most initiatives have targeted policy making. While these being steps in the right direction, few have delivered on-the-ground progress in terms of increasing SME access to finance. Innovative financing initiatives for African SMEs, such as the East Africa Fund by Shell Foundation and the Africa Enterprise Challenge Fund by DFID have only recently emerged. Further, research focused on the role of SMEs in sustainable development has been limited. In this context, two immediate needs have been identified: Firstly, a critical review of innovative SME financing initiatives is needed to identify best practices principles for financing SMEs; secondly, a systemic review of the African SME sector is needed to assess its role in the continent's sustainable development. Finally, results from the research need to be disseminated to relevant stakeholders to elicit appropriate action.

Proposed Project: Addressing the gaps identified, an action-oriented and interdisciplinary project is proposed that will identify best practices in innovative financing mechanisms targeted at the African SME sector, assess the role of SME sector in sustainable development of Africa, and organize an international workshop to share findings and elicit action from relevant stakeholders. The workshop, to be held in Geneva in September 2007, will share findings on themes of innovation and sustainability as they relate to SMEs in Africa, and will make a call for action from relevant stakeholders towards increasing African SMEs' access to finance. Catalyzing growth of SME sector in Africa, the project falls within the thematic areas of sustainable development and social equity, and will be brought to fruition through an innovative partnership between the UNEPFI, HEC (IOMBA), and WWF; UNEPFI will conduct a survey of financing initiatives to identify best practices, WWF will share its extensive on-the-ground work in Africa on sustainable livelihoods and with SMEs, and IOMBA will engage students via call for papers, provide support with the discussion format, participant selection for the workshop, while ensuring high academic quality of outputs. In a co-financing arrangement, partners will provide incash & in-kind contributions as indicated in the budget. Overall project management will be carried out by a project coordinator from University of Geneva working closely with counterparts from UNEPFI and WWF.

The grant provided by the GIAN for this project totals SFr 40,000

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Project Team

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