AUDA-NEPAD, Ecobank join forces to support Africa’s MSMEs
The African Union Development Agency (AUDA-NEPAD) and Ecobank Group kick start their collaboration to strengthen Africa’s response to micro small and medium enterprises (MSMEs).
May 28, 2020: The African Union Development Agency (AUDA-NEPAD) and Ecobank Group kick start their collaboration to strengthen Africa’s response to micro small and medium enterprises (MSMEs). 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 protect the livelihoods of millions of Africans.
A virtual workshop facilitated by McKinsey held on May 26, 2020 provided an opportunity to reinforce 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 5 sectors in Africa, including trade, agriculture, manufacturing, construction, and hospitality. Some 25 to 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 ongoing efforts to support MSMEs while leveraging organisational capabilities for medium and long-term support.
Governments have committed in average $20 billion to support MSMEs recovery, however access to existing commitments will likely be limited to registered medium enterprises due to criteria outlined by governments and the reducing 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. Based on this estimated financing gap, only 6 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, partnerships such as that being co-led by Ecobank Group and AUDA-NEPAD are vital.
Ade Ayeyemi, Ecobank Group CEO remarked, this initiative is 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. 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.