Enhancing smE financing in acp countries - ACP Business Climate

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Smes in the acp context
Small and medium-sized enterprises (SMEs) are the
backbone of all economies and a key source of economic
growth, dynamism and flexibility in advanced industrialised
countries, as well as in emerging and developing economies.
SMEs constitute the dominant form of business organisation,
accounting for over 95% and up to 99% of enterprises
depending on the country. They are responsible for between
60-70% of net job creations in OECD countries 2 .
The High-Level Meeting of 15 July has requested that targeted
enterprises for the purpose of this study be the SMEs in
the context of ACP Countries, as specified by the Terms of
Reference. For this purpose, the study uses as sources mainly
Development Finance Institution (DFI) databases as well as
country visits.
For the purpose of reaching an adequate definition, the SME
classifications in the four countries visited are representative.
These are thresholds generally equivalent or higher to
those retained by banks, whose activities are often divided
between wholesale (larger corporate borrowers) and retail
(which includes SME lending). In Grenada, an enterprise
with net assets above €278,000 is no longer considered an
SME, whereas in the Dominican Republic the threshold is
€780,000. In Ghana, the threshold is €694,000 in net assets,
whereas in Togo the threshold is €1,140,000 in total assets for
industry and €381,000 for other sectors. Such typology led
to the definition of a category of SMEs that are in need of
particular attention in terms of access to finance, defined as
the “Missing Middle”.
Reaching an adequate definition of the SME fabric in a given
country must be done by field analysis. The new approach of
the World Bank Group, including principally the IFC, consisting
of defining SMEs on a country basis may be helpful in the
ACP context. Indeed, Development Finance Institutions have
veered away from a global definition of SMEs in developing
countries to adopt a country based approach 3 .
2 Sources of financing for EU-based SMEs: http://www.oecd.org/dataoecd/53/27/37704120.pdf
3 Among many sources, the following describes this new approach. MSME definitions are given per Country, together with the structure of the MSME sector and MSME participation in the
economy.
• Small and medium enterprises across the globe : a new database, Volume 1:
http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=477872&piPK=64165421&menuPK=64166093&entityID=000094946_0309160409277
• IFC: The SME Banking Knowledge Guide (2006): http://www.ifc.org/ifcext/gfm.nsf/AttachmentsByTitle/SMEBankingGuidebook/$FILE/SMEBankingGuide2009.pdf
• WB/IFC Excel Database per Country: “Micro, Small, and Medium Enterprises: A Collection of Published Data” http://rru.worldbank.org/Documents/other/MSMEdatabase/msme_database.htm
Enhancing SME financing in ACP countries
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