African SMEs’ Performance and Behaviors during COVID-19

Part 4: Program Recommendation, Suggested Actions & Public Policy Insights

In this part, we try to highlight policy recommendations that can help African SMEs overcome the current and future challenges based on diferent researches, articles and the extracted data from the simulation program, capacity buildings, 6 surveys which involved 490 businesses in the frst phase and 120 businesses in the implementation phase.

1- Finance

Public policy should address shortcomings in the local market supply and demand for fnancing between fnancial institutions and SMEs, so that funding becomes more easily available to the beneft of both the fnancial institutions and the SMEs. The scope of instruments must be widened to include the following: ● Easier opening of corporate accounts for SMEs. ● More adapted corporate products and fees for SMEs. ● Eligibility criteria to obtain a line of credit for SMEs through the banking system should be reviewed with the objective of combatting the entrance barrier. ● The role of associations and NGOs should be reinforced as they bring help for SMEs. ● Factoring is still in their nascent phase and should be promoted as an alternative for fnancial institutions. ● Crowdsourcing should be exploited as the innovative ways to improve fnancing provision. The success stories coming from Asia in that matter should become a roadmap for African SMEs growth. ● Microloans look like an upcoming viable fnancing source for SMEs, however, it remains handicapped by too many legacy systems and regulations. ● During a pandemic crisis, governments, agencies and commercial banks must enact measures for the temporary relief of enterprises afected by the crisis, including freezing or deferring fnancial obligations, such as loan repayments. They could also extend loan maturities, and temporarily freeze debtor ratings.

2- Electricity and Energy supplies

The growth of renewable energy is a potential game-changer for Africa but, given its needs, it has a long way to go. Meanwhile, many SMEs in Africa still rely on fossil fuels for their baseload energy supply. Some SMEs are particularly vulnerable to the disruption of business networks and supply chains with frequent power outages. Given the importance of power to African SMEs, public policy should tackle the following areas:

● The role of the governments should be strengthened to promote green energy programs.


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