The BBC World Service ran a radio show this weekend called In the Balance about the challenges facing small and medium enterprises (SMEs) in Africa. SMEs are the continent’s largest employers and thus their growth is an important feature of economic development – Nigeria for example has 17 million SMEs.
Here are some highlights from the show:
Advice to SME entrepreneurs from Herman Chinery Hesse, CEO of Soft Tribe
“Start early, stick with it, innovate, lobby government to make the business environment more palatable”
Hesse would like to see better access to finance for SMEs: he says that banks only want to loan large amounts – he could do a lot with 100k to grow his business – bankers should “acquire the skills” to make these small loans. The President of the African Development Bank, Donald Kaberuka, points out later in the show that it is “inefficient” for lending institutions to make small loans. Hesse puts lack of investment down partly to an image problem. He says that the banker in London still views Africa negatively, through the eyes of Hollywood with movies like “Blood Diamond”.
Hesse comments that foreign aid in a lot of cases “distorts local markets” – by funding selected businesses, the disbursed funds contribute to the collapse of other businesses trying to compete in the same space.
Kaberuka says that there are three areas that SMEs can be helped by government.
Better infrastructure – if the power goes then an SME will die – a large company can generate it’s own power
Enabling rules – SMEs want simple rules and regulations and not be swamped with complexity.
In the same vein, Teddy Ruge summed up the SME experience in Africa,“if you can make it Africa you can make it anywhere“.
The discussion then moved onto branding with a irreverent take from Irish stand up comic Colm O’Regan on how Ireland’s brand is currently faring – like all smart comedy he is also being serious – he points out that global brands are controlled by just a few companies like Kraft and P&G – so what prospects are there for African brands in this dominance? Michelle Essome says the future is bright for African brands due to population growth and growing companies like MTN and more niche brands in retails and coffee