The Aspen Network of Development Entrepreneurs (ANDE) has revealed that it is working with international financial institutions to address the over US$1billion funding gap in the Small and Growing Businesses (SGB) space across the continent.
Although SGBs constitute about 90 percent of the continent’s gross domestic product (GDP), they face a myriad of challenges – key among which is a US$1billion annual funding gap. It is estimated that, annually, SGBs will require US$1bn in the form of patient capital to ensure scalability, growth and sustainable development.
The other significant challenges faced by SGBs are access to finance, infrastructural and institutional barriers, and poor management said ANDE.
However, in order boost to the sector, Executive Director-ANDE, Richenda Van Leeuwen, revealed that ANDE is working on partnerships and collaborations with international financial institutions to secure patient funds for SGBs in Africa – adding that the target is to close the over-US$1billion annual financing gap, enabling SGBs to scale-up and ensure sustainability.
Patient capital provides long-term investment in the form of debt or equity, whereby sustainable growth is prioritised alongside financial returns – allowing money invested in entrepreneurial building companies and organisations to solve tough problems.
Speaking at the three-day Aspen Network of Development Entrepreneurs (ANDE) Conference 2023 held in Accra, she emphasised that SGBs are a powerful tool in addressing social and environmental challenges and can play an even greater role in economies if given the needed support.
Beyond creating jobs, SGBs create goods and services that benefit all sectors of society and ensure shared prosperity. She explained that they are also essential to growth of the lower- and middle-class.
The three-day Aspen Network of Development Entrepreneurs (ANDE) Conference 2023 brought together high-level development entrepreneurs from the continent and other parts of the world. It was the first of its kind in West Africa.
It provided thought-provoking insights into the potential, opportunities, challenges and sources of support for the SGB sector in Africa.
Agribusiness firms constitute a larger chunk of SGBs and are said to be highly underutilized, as the continent has the largest, most viable arable land; and is home to several dynamic food crops and resources but continues to be dependent on imports.
The Executive Director mentioned that ANDE has a mission of strengthening entrepreneurial ecosystems for small businesses, hence hosting the conference in Ghana – which is the first in West Africa – will provide the opportunity to underscore its commitment in promoting decent work, economic growth, gender equity and climate action as core requirements for sustainable growth.
“SGBs play a pivotal role in economic growth and sustainability, but they often lack access to the financial and knowledge resources required for growth. The kind of capital required by these businesses is patient capital that will be enough to scale-up without collateral demands that they usually cannot provide; and also without pressure to pay back in the short-term with high-interest rates.
“The value of SGBs should not be overlooked. Successfully supporting SGBs requires cultivating entrepreneurial ecosystems throughout developing economies. ANDE is dedicated to doing just that by building a thriving network of people and organisations, and supporting them through policy and programme initiatives,” she said.
The conference, themed ‘Accelerating Action: Small Business Solutions and the SDGs’, aims to showcase the remarkable progress made thus far and identify the pathways to support SGB ecosystems in their journey to enhance their contribution to the Sustainable Development Goals (SDGs) over the next seven years.
United Nations (UN) Resident Coordinator in Ghana, Charles Abani, on his part mentioned the recent SDGs review report indicated that halfway to the 2030 Agenda deadline, the SDG Progress report reveals that more than half the world is being left behind – and progress has stalled or gone into reverse on more than 30 percent of the SDGs.
In the case of Ghana, he mentioned that the agricultural sector holds great potential and is underutilized for economic transformation and job creation, as small and medium-scale enterprises continue to struggle.
He mentioned among others that his office has identified the need to focus attention on access to patient capital, capacity building for startups, innovative ecosystem enhancement, policy and advocacy as well as coordination and networking to realise the full potential of the agric sector and SMEs as a whole.