peter
Business Reporter
THE African Union Development Agency (AUDA) and Ecobank Group have agreed to kickstart a joint collaboration initiative to strengthen Africa’s response to the Covid-19 pandemic by Micro Small and Medium Enterprises (MSMEs).
While regional governments have committed an average of $20 billion to support MSMEs recovery, the Pan-African banking group said access to existing commitments will likely be limited to registered medium enterprises due to criteria outlined by governments and the reduced appetite of commercial banks to loan to small scale enterprises.
“The funds allocated for MSMEs are insufficient in most countries, leaving the biggest gaps in micro to small unregistered businesses,” said Ecobank in a press statement.
Based on this estimated financing gap, Ecobank said only six out of 20 countries have made commitments that can cover the MSMEs labour costs, including South Africa, Egypt, Cote d’Ivoire, Gabon, Chad and Cape Verde. For this reason, the bank said partnerships such as that being co-led by Ecobank Group and AU are vital.
As such Ecobank announced the key focus areas of the joint drive for sector, stressing the importance of small businesses to the African economy in which MSMEs account for almost 85 percent of all private sector employment.
High level representatives from the African Union Commission, regional development banks, development financial institutions, international organisations and commercial banks from the continent came together to focus their efforts on supporting the MSMEs segment and protecting the livelihoods of millions of Africans.
A virtual workshop facilitated by McKinsey held on Tuesday reinforced the commitment of national, regional and continental institutions to work together to support MSMEs following the Covid-19 pandemic.
“MSMEs are critical to the African economy as they account for almost 85 percent of all private sector employment. Vulnerable jobs are in five sectors in Africa, including trade, agriculture, manufacturing, construction and hospitality,” said Ecobank.
“Some 25-160 million jobs in Africa are vulnerable due to the impact of Covid-19. This presents an opportunity to come together to increase capabilities available to MSMEs across the continent.
“Leaders acknowledged the need to continue on-going efforts to support MSMEs while leveraging organisational capabilities for medium and long-term support.”
The AUDA-NEPAD chief executive officer Dr Ibrahim Assane Mayaki was quoted as saying the success of this initiative will depend on the number of partners and of the quality of the partnerships. He commended all the participants for their interest and called their respective organisations to join as partners to drive the mission together.
Ade Ayeyemi, Ecobank Group chief executive said the initiative was focused on empowering MSMEs and to ease restarting and growing Africa’s economies with the knowledge that a significant number of jobs will be lost and businesses incapacitated.
He said the workshop provided a platform for stakeholders from East, West, Central, North and Southern Africa to identify priority areas and strengthen our collective approach to safeguarding this sector, especially the micro enterprises.
“We believe that a multilateral approach, which includes organisations, private sectors and governments will be beneficial and imperative for a successful implementation of support for Africa’s MSMEs,” said Ecobank.
Online Reporter