Enhancing smE financing in acp countries - ACP Business Climate

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2 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 11
3 Access to finance: current channels, instruments and roles 12 Enhancing SME financing in ACP countries
Page 1 and 2: Enhancing sme financing in acp coun
Page 3 and 4: Design: www.mazygraphic.be
Page 5 and 6: Table of contents SUMMARY 7 1. INTR
Page 7 and 8: Definitions & Acronyms ACP ADR AfDB
Page 9 and 10: 1 Introduction 8 Enhancing SME fina
Page 11: 2 Smes in the acp context 10 Enhanc
Page 15 and 16: 3 Access to finance: current channe
Page 17 and 18: 4 The sme financing gap: causes 16
Page 19 and 20: 4 The sme financing gap: causes Com
Page 21 and 22: 5 Closing the financing gap: option
Page 23 and 24: 5 Closing the financing gap: option
Page 25 and 26: 6 Implications for the eib investme
Page 31 and 32: 7 Recommendations 30 Enhancing SME
Page 33 and 34: 7 Recommendations 7.3. Recommendati
Page 35 and 36: 8 Possible investment facility (if)
Page 41: Towards a private sector enabling e

Enhancing smE financing in acp countries - ACP Business Climate

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