SME Finance in Africa: Finding the Missing Piece
Funding is one of the critical factors in the development of entrepreneurial and SME enterprises in Africa. J. Skyler Fernandes, Chief Operating Officer of the South African Chamber of Commerce in America (SACCA), joins AfribizTalk to discuss what is happening with a particular segment of SME finance in Africa – that between microfinance and venture capital.
This segment of finance happens to lack a cohesive industry, so it’s known as the “Missing Middle.” The “Missing Middle” includes finance between $20,000 and $3,000,000. Fernandes says that this segment of SME finance is the next wave of innovation after microfinance. In fact, he shares that while a young industry, SME funds have grown 80% in the last few years.
This also has practical applications for both entrepreneurs and investors involved in Africa. As more funds appear on the horizon, access to funding will become more widely available. But what SME funds typically look for are “polished” entrepreneurs, according to Fernandes. “Polished” entrepreneurs are
those who have delivered a proof of concept, implemented operations, and/or proved there is a demand for their products or services. So, we discuss a few tips to help entrepreneurs better position themselves to tap into funding.