Through a new initiative called “Choose Africa”, the French Government will contribute towards the development of the African continent.
According to the French President, Emmanuel Macron, his Government pledged to support the revolution of African entrepreneurship through the initiative which was launched yesterday.
The “Choose Africa” initiative will devote 2.5 billion euros to financing and supporting African startups, VSEs and SMEs by 2022.
Partners in the initiative
The initiative will be coordinated by the AFD Group and Proparco. It was reported that AFD and its subsidiary will be dedicated to the private sector, while Proparco will be mobilised to support nearly 10,000 companies at different stages of their development.
Lack of finance for SMEs in Africa
By 2050, the labour market in Africa is expected to accommodate 450 million young people. Startups and small and medium-sized enterprises will play a key role in creating the much-needed Jobs’s, whilst advancing economic growth and innovation.
But to achieve this goal, SMEs will need to be supported with credit facilities, which will help them develop their ideas, grow their business, and become employers of labour.
Today, only 20% of SMEs in Africa have access to bank loans. And 87% of startups have no access to financing.
Breakdown of disbursement
1 billion euros will be invested in equity in startups, small businesses and SMEs in Africa, while 1.5 billion euros will be used to facilitate access to credit for small and medium-sized enterprises via public or private local financial institutions (microfinance institutions, banks, leasing companies, etc.).
In total, nearly 10,000 African small and medium-sized enterprises will benefit from “Choose Africa”, including 600 through equity investments.
Through this initiative, France, via AFD and Proparco, reaffirms its commitment, alongside African entrepreneurs, to engender the continent’s economic development.
SMEs will be provided equity investments and tools facilitating access to credit (through credit lines dedicated to SMEs, granted to African financial institutions, or via guarantees granted to banks to cover SME risk).
Aside from exposing SMEs to credit facility, these businesses will also offer technical support to financial institutions in their support activities for SMEs, to train companies and entrepreneurs to improve their environmental, social or governance practices.
It will also offer technical support to financial institutions in their support activities for SMEs, to train companies and entrepreneurs to improve their environmental, social or governance practices, and finally to develop accelerator and incubation networks local ecosystem support actions to develop an enabling environment for entrepreneurship and SMEs.