African SMEs’ Performance and Behaviors during COVID-19

Table 2.8: Factoring for SMEs

G- Micro-Loans

Out of 36 respondents who considered microloans as a workable fnancing channel, only 8 ever applied for microloans which is a very low percentage of respondents. Among those 8 only 3 successfully obtained microloans! These results refect a structural problem with microlending in the African continent, since typically, microlenders work on marketing loans to SMEs since their access to banks is traditionally difcult. We then tried to uncover why microloans are not as used with Africa SMEs as they are in the developed economies. The process for applying to microlenders seems to be identical to that of bank loan application, which does not encourage many SMEs to approach microlenders for their fnancing needs. The idea is that microlenders are supposed to be more agile and less complicated regarding their paperwork requirements to approve loans. Regarding pricing of microloans, and since it is a relatively small population that tackled microloans as a possible fnancing option, the responses collected are non-conclusive regarding this element. Finally, on the subject of having a competitive market for micro-lenders that creates a favorable environment for SMEs to obtain their fnancing needs from, again the responses collected are non-conclusive (10 respondents who agree / strongly agree versus 10 respondents who disagree / strongly disagree) with the statement “There are obviously several microlenders that create competition to give microloans to companies like mine”.


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