Finance for Development: Improving Access to Financial Services for Sustainable SMEs in Africa
This paper examines how access to financial services for sustainable small and medium enterprises (SMEs) in Africa can be improved. It states that access to finance is a necessary but not sufficient criterion for developing a sustainable SME sector in Africa. The paper reports on the bottlenecks for SME finance. It proposes interventions at the levels of the regulatory framework, financial institutions, and the SME sector. The paper then focuses on how financial institutions can contribute to an SME sector that is financially, socially and environmentally sustainable. Recommendations include:
- Financial sector must be supported in developing appropriate financial products for SMEs;
- Fact sheets developed by Triodos Facet can be used as a starting point to help the financial sector in Africa assess and enhance the non-financial impact of their SME clients;
- Assistance for SMEs must focus on developing entrepreneurship and enhancing management skills;
- Interventions should also focus on raising SME awareness on sustainability and developing practical tools for them to integrate sustainability in their business.