This archive report was first published on 7 May 2021.
As the African Continental Free Trade Area (AfCFTA) continues to shape the continent's trade landscape, experts are urging states and financial services providers to collaborate in providing affordable loans to Small and Medium Enterprises (SMEs) in the manufacturing sector.
Speaking during a virtual session organized by the Kenya Association of Manufacturers (KAM), industry experts noted that SMEs face significant barriers in accessing both local and international markets, with financial institutions often considering them high-risk borrowers.
“SMEs continue to face barriers which hinder them from accessing both local and international markets. For instance, financial institutions consider them as high-risk borrowers, hence are reluctant to lend to them. Lending to SMEs shall enhance their competitiveness, thus creating a level-playing field between them and products manufactured in other markets,” said Joyce Njogu, KAM Head of Consulting.
With the easing of some health measures, the Central Bank of Kenya (CBK) recently noted a 15.8% growth in credit to the manufacturing sector in 12 months to February, signaling a recovery.
However, experts warn that the challenges facing SMEs in accessing affordable loans are far from over. Emeka Uzomba, Senior Advisor Africa Export – Import Bank, noted that the commencement of trade under AfCFTA has brought new challenges for small businesses across Africa, and that creating solutions to finance businesses is crucial to taking advantage of opportunities presented by different trade agreements.
According to Julius K. Kirima, Director for Chemicals and Minerals, Ministry of Industrialization, Trade and Enterprise Development, SMEs must adhere to policies and regulations put in place to trade across the continent.
“Government’s policies and regulations seek to ensure that all products and services adhere to the highest standards, for them to gain access to other countries,” Kirima said.
Experts also emphasized the importance of harnessing technology to enable the swift movement of goods, services, money, and skills in Africa.
“Technology and development under multilateral trade are inseparable. Harnessing technology, by both the business community and participating governments, shall enable the swift movement of goods, services, money and even skills in Africa. Automation of systems also has the potential to significantly reduce costs,” observed Dierdre Fryer, Syspro Africa Head of Solutions.
