Technology and global partnerships are helping to close a $331- to $421-billion funding gap, which is preventing the growth of companies in sub-Saharan Africa.The United Nations Economic Commission for Africa estimates that there are 44 million small and medium enterprises (SMEs) in the region.Providing finance for growth would increase intra-African trade and reduce poverty.In a number of countries, SMEs make up 90% of all businesses and sustain over 60% of the jobs.Their biggest obstacle to growth is lack of access to finance, a situation made worse by the global lockdowns in response to the Covid-19 pandemic, according to a recent United Nations study.Private and government banks are using technology to access the $421bn market and manage their risks.Logistics companies have also become financiers. Launched in 2021, DP World Trade Finance has over 23 financial institutions on its platform, including Standard Bank and Nedbank from South Africa. In September 2024, Nedbank announced it had entered into a supply chain finance agreement with DP World Trade Finance.The two institutions have also signed a risk-sharing agreement, which DP World Trade Finance says will “enhance the trade finance availability to businesses across the reg ion”.Non-bank financing institutions are also showing an appetite for financing African businesses.One is Finvex.tech, which combines factoring with digital technology to provide a platform to manage factoring throughout the supply chain, in partnershipwith financial service providers and donors.It eases cash f low constraints by providing early invoice settlement. The African Development Bank (Af DB) has introduced an Africa SME Programme, which facilitates the financing of businesses through providing lines of credit and technical assistance to lending institutions. “A f DB supports local financial institutions in such a way that they will increasingly see SMEs as a real and successful market opportunity,” says the bank on its website.Regionally, the SADC Development Finance Resource Centre provides technical and capacity-building support, as wellas policy research, advocacy and advisory services to the financial sector to support investment in “key areas with the potential to stimulate sustainable and inclusive growth, generate employment and alleviate poverty”, the organisation states.Central banks are also addressing the financial challenge facing businesses. The Reserve Bank of Malawi is partnering with commercial banks, microfinance institutions and development finance institutions to provide low-cost business loans. Then there are the innovations in finance through mobile money.According to the GSMA, Africa accounts for over half of all mobile money transactions. In 2023 there were 835 million registered accounts on the continent, which made transactions worth $912bn.Mobile money services are being used for business transactions, the transfer of grants and the provision of loans. ER
