Between mid-2020 and the end of 2021, the coalition for a sustainable and inclusive recovery of the private sector, an international group of 20 development finance institutions that came together in 2020, announced commitments of over $5.55 billion in financing to micro, small, and medium enterprises (MSMEs) in Africa, exceeding their target of $4 billion.
The coalition said that it had exceeded its initial objective by 40%, with development finance institutions committing a total of $5.55 billion in financing to micro, small, and medium-sized businesses in Africa throughout the time.
At the first Finance in Common Summit in November 2020, the EDFI Association, on behalf of its 15 European member development finance institutions, together with the African Development Bank, the West African Development Bank (BOAD), FinDev Canada, the U.S. International Development Finance Corporation, and the Islamic Corporation for the Development of the Private Sector, launched the coalition. The Trade and Development Bank joined it soon after.
In response to the unprecedented global health and economic crisis caused by Covid-19, the coalition recognized the critical role development finance institutions play in supporting the crisis response in vulnerable countries.
While micro, small and medium enterprises are the economic lifeblood of emerging and frontier economies, they are also more vulnerable to crises than larger enterprises. In developing countries, formal small and medium enterprises contribute more than one-third of gross domestic product and account for 52% of formal employment.
African Development Bank President Akinwumi Adesina said: “Micro, small, and medium-sized enterprises are vital to Africa’s prosperity, representing 90% of all businesses and generating more than half of all jobs. Many small entrepreneurs will tell you that limited access to finance is a major hurdle to growth. The $5.5 billion that we are committing together will go a long way in overcoming this hurdle. I am confident our initiative will make a major contribution to the success of micro, small, and medium-sized enterprises all over Africa. If they grow, we all do.”
“MSMEs are vital to Sub-Saharan Africa’s economy, representing 90% of trade and more than half the jobs in the region. As these businesses disproportionately suffered the impacts of the health crisis, we joined efforts to provide capital and advisory services to support the economic recovery. Surpassing our initial goal further motivates us to collaborate with our partners to promote sustainable and inclusive economic growth in Sub-Saharan Africa,” added Lori Kerr, CEO, FinDev Canada.
