The health crisis of the Covid-19 is wrecking the economies of the countries of the continent, households, and especially of the very small and medium-sized enterprises, the real pillars of the economic life of the african. These businesses contribute to nearly 33 % in the africa’s GDP and provides 85% of employment in the private sector. The pandemic of Covid-19 and, especially, the restriction measures adopted in march and April the have weakened a little more. For the first time, the States are highly mobilized from the north to the south for the support and designed solutions for the following. The opportunity also to think of this crisis as an opportunity to transform the informal sector.
losses already colossal
The stakes are high : a report released by the african Union has estimated that the economic crisis caused by the Covid-19 could lead to the destruction of nearly 20 million jobs. The African Guarantee Fund (AGF), specialized in the financing of small and medium-sized businesses, estimates that “between 20 and 40 billion dollars,” the loss of turnover for SMES in Africa by 2020 due to the pandemic. These figures could be much higher, while african companies are affected in various ways. There are those whose supply is dependent on China that were affected by the long months of stop. Then come those who export to the Asia, Europe, or the United States, markets which are closed from one day to the next. Finally, the majority of businesses have had to close because of the containment measures in part. This is the case of SMES in the tourism, catering, hairdressing, services, telecommunications, etc
solutions are already advanced on the budget plan with a strong involvement of african States and the support of international donors. But all this is still insufficient, the IMF and the world Bank even estimated in mid-April it was € 44 billion to Africa to fight against the coronavirus. To the extent that these structures are already facing enormous difficulties in the search for capital, in their structure and their deployment. It should be noted that the financing of SMES is still seen by many players in the financial sector in Africa as a risky activity.
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Everywhere, draft responses
Several countries are also mounted to the niche to protect their SMBS. The ivorian government has provided, among other things, a guarantee fund for SMES and informal sector enterprises in the amount of 100 billion CFA francs. Similarly in Senegal, the Plan Covid19 provides for the establishment of a funding mechanism for companies in the amount of 200 billion CFA francs in the form of credits, cash or investment in partnership with the banking sector.
The south african government has thus put in place measures to support enterprises, including 10 billion euros in loan guarantees. Many of them will, however, resume their activity from the 1st of June, as recently announced by the president, Cyril Ramaphosa, this would allow ” the return to work of nearly 8 million people “. For the country, the lifting of restrictions is essential to preserve the economic health of the country.
At the continental level, the african development Bank (AFDB) has announced the creation of a fund of 10 billion dollars to support the economies of african countries. And the african Union (AU) to launch, on 7 April, a special fund against the Covid-19 in which the member States have already agreed to contribute up to $ 17 million. “We need to mobilize all resources to contain this pandemic and to prevent the collapse of economies and financial systems that are already in trouble,” said the chairman of the AU, the South African Cyril Ramaphosa. The challenge is finding the money available quickly. Institutions, such as the world Bank or the ADB have pledged billions, are subject to coercive procedures, and their helpers, often taking several months before being released.
The AU has already launched in the creation of a centralized platform through its partnership with Ecobank. The objective is to address ” the issues, challenges, and needs of the MSMES during and after the Covid-19, and that will be a comprehensive tool, flexible, comprehensive and universal for the MSMES in the formal and informal sectors on the continent. “
In the Weamu region, the time is already to innovation and the central Bank, the BCEAO, has launched the good Covid-19. The money immediately available for the States of the zone. In a few days, he has passed for almost 1,200 billion CFA. And success is not almost stop, and the country are still more likely to seize this tool.
” In Africa, people who work are mostly in small or medium-sized enterprises, in the informal sector. They work every day an hour here, an hour there. It can become a social crisis ! ” warned his boss Akinwumi Adesina on the antenna of the radio RFI, at a time when many countries on the continent have adopted measures of containment of the populations. “Unfortunately, Africa does not have the resources to make the compensation, to offset the salaries of the people, as the developed countries have done “, he continued. “If people can’t produce, we will have another crisis, which will be a food crisis “, he also explained.
A fund of 2.4 billion dollars
And it is there that intervenes the African Guarantee Fund. Through its guarantee facility, AGF assists financial institutions to partially hedge the risk related to the financing of SMES. The institution announced Monday, may 18, the establishment of a fund of two billion dollars. “The mechanism Covid-19 of the AGF amounted to $ 1.2 billion guarantee, which will enable banks to finance the SMES by up to $ 2.4 billion dollars at least for a period of two years,” said a press release. “The consequences of the pandemic Covid-19 will continue to have negative effects growing on SMES in Africa, both on the supply side of credits from that demand,” said Felix Bikpo, ceo of the AGF. “Therefore, we anticipate a deterioration in the creditworthiness of SMES. It is likely that this factor will result in an increase in the cost of credit to the financial sector, which will certainly enhance its reluctance to fund SMES in the absence of external stimuli. “The AGF is also continuing to” provide its technical assistance to develop the capacity of financial institutions to assess the risks of SMES, “adding that” this will analyze the impacts of the pandemic on the financial institutions and provide responses suitable to an effective adaptation of SMES to this new context “.
The resilience of african SMES
Since the beginning of the crisis the small and medium-sized enterprises have shown the strategy to resist and survive. Example in Nigeria. Before the outbreak of coronavirus, Rovingheights, bookstore, based in Abuja and Lagos, has had to close not only its two sites, but also its delivery service. In Nigeria, the small and medium-sized enterprises such as Rovingheights represent 96 % of all businesses and 84 % of jobs, and over the past five years, they have contributed to about half of the GDP of Nigeria, is to inform the site analysis Stears Business. To survive, the company turned to digital and Flutterwave, a young shoot american who has developed a payments solution. The start-up has signed this year, a big partnership with Alibaba, allowing traders africans to receive payments from users of its payment app Alipay. “You have small companies that are being penalized because of the Covid-19, they are all closed. Then, we asked ourselves what we can do to help them ? We then created the online site Flutterwave that allows any small business anywhere in the world to connect, create a profile, upload their products and start to sell, ” explained its founder, Olugbenga Agboola to CNN.
adapt certainly, but many voices are being raised more and more to make the health crisis an opportunity to go further by bringing in, for example, businesses in the informal sector in the formal and thus boost the entrepreneurial ecosystem in africa.
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