African SMEs’ Performance and Behaviors during COVID-19

Only 11.9% of businesses obtained fnance over their own capital. More than half of those who applied for a loan applied for it in the last three years (2018-2020). Out of those 35 who applied for a loan only 20 (57,1%) successfully obtained one. Out of the 20 who successfully obtained a loan, only 6 (30%) obtained a loan amount that corresponded to their request / need.

Figure 2.1: Need of Finance

This shows the critical challenge that African SMEs are facing with access to fnance. When only (6 out of 295) less than 2% of the total population can have access to fnancing with satisfying credit amounts, it means that this challenge is prominent among challenges facing startups in the African continent. Among the reasons mentioned for not being able to obtain a loan, it was mentioned:

- “The bank refused to commit itself”. - “Lack of collateral (mentioned several times) - No assets” - “Too expensive - The bank interest is very high” - “No reason (was communicated to us) - Not sure” - “Our cash Flow is not strong” - “(Our company is still) informel and not yet registered”

Conversely, some 74 from our respondents (25,2%) admitted applying for a personal loan intended to cover for their company fnancing needs.

Types of accounts In this section, we asked respondents which kind of account (personal and/or company) they used for their startup and for which reasons. The chart clearly indicates that only about half of the respondents already have a company account (55,10%), while 28,6% use only a personal account and some 11,90% use both types of accounts (personal and corporate) to manage their company fnances.


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