Enhancing smE financing in acp countries - ACP Business Climate

1
Introduction
1.1 Rationale of the Study
The study was prompted by ACP States’ concerns relating
to a perceived low level of access to finance by SMEs in the
ACP States, small projects, and projects in small countries to
the ACP Investment Facility (IF) created under the Cotonou
Agreement and managed by the European Investment Bank
(EIB). These concerns were embodied in a Resolution of the
ACP Council of Ministers of November 2010.
1.2 Objectives
This Study was launched by BizClim on behalf of the
ACP Secretariat with the aim of finding solutions to the
perceived limited SME access to finance. The resulting
recommendations are also expected to present options for a
better SME outreach of the IF.
• •identify constraints faced by SMEs in the ACP in accessing
finance, and remedies and options for improved access to
finance;
• focus on the level of SME access to finance from the IF
(placed also in the context of the IF Cotonou endowments
not being yet fully committed);
• review the subsidiary question of access to the IF by small
projects and smaller States. This review is expected to
lead to practical recommendations for enhancing access
to IF finance.
Finally, the observations made, and the recommendations
endorsed by the participants at the 13-14 October 2011 ACP
High-Level Meeting organised by the ACP Secretariat have
been essential in determining the final orientation of this
study.
The study is organised with a view to tackling:
• •What SMEs need most in the ACP context;
• What is available in terms of SME support: vehicles and
instruments;
• Constraints: what is missing - the credit gap and beyond;
• ... of which weak SME capacity for accessing finance is a
central point; and
• ... of which the weak interest of commercial banks for
SMEs, and what can be done about it, is an overriding
concern;
• Remedies, options and opportunities to overcome the
constraints;
• What the EIB-managed Investment Facility can do,
beyond its current role, for better outreach and support
to SMEs.
Alternatives are compared, and the possible resulting
roadmap is tabled to conclude the study.
The EIB provides financing in the ACP not only from the IF,
but also from its own resources, and thus the Study would
often consider the whole of EIB’s current and potential
interventions in the ACP Countries targeting SMEs and the
financial sector.
1.3 Methodology
Concerns, views and recommendations of a large crosssection
of stakeholders in the ACP countries were gathered
at two high level meetings organised by the ACP Secretariat
in support of this study.
Findings are based on a desk review of studies on the
subject of SME access to finance, relevant experiences of
development finance institutions, an examination of the EIB
portfolio of operations through financial intermediaries, and
the Mid-term Evaluation of the Investment Facility and EIB own
resources operations in ACP countries and the OCTs (2010) 1 .
Additionally, as part of this study work, two African countries
(Ghana and Togo) and two Caribbean countries (Dominican
Republic and Grenada) were visited for a stronger sampling
of the SME fabric, SME needs and available finance.
But, foremost, the study focuses on important issues that were
tabled by participants at the High-Level Meeting convened
by the ACP Secretariat on 15 July 2011. The Proceedings of
that meeting are available and contain the key themes that
were addressed.
1 http://ec.europa.eu/europeaid/how/evaluation/evaluation_reports/2010/1285_docs_en.htm
Enhancing SME financing in ACP countries
9