By Rodrigo Deiana, Junior Policy Analyst, and Arthur Minsat, Head of Unit for Europe, Middle East and Africa (acting), OECD Development Centre
The topic discussed here builds on the success of the 2017 Africa Forum
African firms don’t have it easy. Among the many constraints faced by formal companies, access to finance consistently ranks as a top issue. Almost 20% of formal African companies cite access to finance as a constraint to their business.1 Overall, African micro, small and medium enterprises (SMEs) face a financing shortfall of about USD 190 billion from the traditional banking sector.2 African firms are 19% less likely to have a bank loan, compared to other regions of the world. Within Africa, small enterprises are 30% less likely to obtain bank loans than large ones and medium-sized enterprises are 13% less likely.3
To bridge this gap, governments and market players need to strengthen existing credit channels as well as expand new financing mechanisms.