Enhancing smE financing in acp countries - ACP Business Climate

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Implications for the eib investment facility and the ec
Indeed, in most ACP countries, the perceived credit risk is
more of a constraint than the processing costs related to
smaller enterprises.
The EIB/IF has attempted to apply guarantee facilities for
SME financing purposes, and broader resource mobilisation
purposes, but the take-up has been poor for a number
of reasons. The EIB is currently recasting its guarantee
programme along some lines.
EIB is aware of the need for more flexibility for blending in
order to develop other instruments (first loss support, direct
grants, etc.) and it is the EIB’s intention to submit a proposal
for the 11th EDF which gives the EIB much more flexibility in
that regard. EU grant funding should support the EIB’s efforts
to develop new guarantee and risk-sharing instruments.
Blending should be expanded from grant and loan blending
to other instruments. Blending of EU grant funding with EIB
instruments could be made a priority for the EU in the ACP
countries.
Capacitating SMEs is a precondition to enlarging the SME
population that can hope to access finance. Capacity
support is needed in the following areas:
• Management competence;
• Accounting & transparency;
• Forecasting and market surveys;
• Articulating and presenting bankable dossiers;
• In order to develop feeder SME industries into larger
projects, a country plan is needed - defining the
participants in sectors such as infrastructure and tourism,
their potential dynamic effect on the economy, and a
financial scheme for start-ups.
Delivery channels for capacity building should be grantbased,
and preferably handled by private sector actors with
the assistance of banks.
Grant funding for SME capacity building
An equally important recommendation is a substantial
increase in capacity building for SMEs. This is a particular
area in which the EU can play the main role in allocating grant
funding to be managed in conjunction with the EIB.
The need to support the demand side is well established. EIB
is aware of this, as it has included some capacity building for
SMEs (though this has been limited due to the scarcity of TA
grant funding available to the EIB) in several of its financial
sector operations, as listed below.
Enhancing SME financing in ACP countries
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