It is obvious from the chart African businesses recur primarily to their own savings / economies when raising capital for their SMEs (mentioned 229 times), followed by Investors (mentioned 177 times), then by relatives and friends (mentioned 136 times), then by associations and NGOs (mentioned 109 times), then by banks (mentioned 77 times) coming at 5 th position, then by crowdfunding (mentioned 62 times), then by microloan institutions (mentioned 36 times), and fnally factoring (mentioned 15 times). This indicates that the classic channels of fnancing (like banks and microloan institutions) are not as popular among African SMEs, thus limiting abruptly the growth of these companies. When considering which fnancing channels did respondents actually pursue to raise capital for their startups, it appears that once more personal savings and economies come as the number one arm of fnancing (mentioned 247 times), followed by relatives and close friends (mentioned 141 times), followed by associations and NGOs (mentioned 48 times), then by investors (mentioned 39 times), then by banks (coming in the 5 th position) (mentioned 18 times), followed by crowdfunding (mentioned 9 times), then by microloan institutions (mentioned 4 times) and fnally by factoring (mentioned 2 times).
Figure 2.17: Raising Capital for SMEs
Hence the results of our survey strongly indicate that the classic fnancial institutions like banks and microloan institutions were not actively involved in fnancing African startups, thus they still may not be considered as dynamic participators in the growth of the SMEs sector.
A- Personal Savings, Friends & Relatives
To look deeper in reasons why respondents pursued raising capital from their own savings and/or from relatives and close friends, we studied the reasons by asking respondents who chose these fnancing channels how much they agreed with the following statements. (Table 2.4) When analyzing the responses to these statements, it appears immediately that startups’ owners who recurred to fnancing from their own savings / economies did so because a) they believed in their projects and what it could realize as return and b) that it is the easiest way to fnancing their projects. This said, the access to fnancing is obviously a great challenge for African
Made with FlippingBook - Online Brochure Maker