French President, Emmanuel Macron Launches €2.5bn initiative to support African SMEs

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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.

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.

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