A $6 billion credit facility is being made available to Ghanaian and other African Small and Medium-sized Enterprises (SMEs) to enhance their production capacities and make them to effectively participate in the African Continental Free Trade Area (AfCFTA).
The three-year credit facility is being made available to SMEs through a partnership between the AfCFTA Secretariat and the United Bank for Africa (UBA).
The partnership seeks to provide the much-needed funding to the beneficiary SMEs and would focus on the four priority sectors of the implementation of the intracontinental free trade pact, which are, agriculture and ago-processing, automotive, pharmaceuticals, and transport and logistics.
The beneficiary SMEs and entrepreneurs would also receive training, technical assistance and innovative solutions to boost their production capabilities and enhance their competitiveness.
Wamkele Mene, Secretary General, AfCFTA Secretariat, and Muyiwa Akinyemi, Deputy Group Managing Director, UBA, signed the agreement in Accra on Monday, June 19.
At the signing ceremony, the Secretary General of AfCFTA, said the partnership arose from a shared objective of boosting intra-Africa trade and enabling SMEs to benefit from the free trade and create jobs, particularly for the young Africans.
“We’ll be working together, where an SME that is financed in seeking to export from Ghana to Kenya, and other parts of the continent, we’ll provide the support for that export to happen and enable that SME to expand to a new market,” he said.
“Both by capitalisation and presence, UBA is one of the largest banks in Africa and has presence in other parts of the world. That means, the SMEs that are supported will have access to global market, the latest technology, and the capital required to trade and do business within the framework of AfCFTA,” he noted.
By 2050, the African market would have a combined Gross Domestic Product (GDP) of about US$16.2 trillion, where one in four people in the world would be African.
Mr Mene indicated that such situation served as an opportunity for investors and the private sector in Africa to support SMEs to grow to contribute to development and job creation on the continent.
“So, we have to prepare for tomorrow, today, and I believe that signing an MoU, which will enable a strong participation of the private sector in Africa is an important priority,” he said.
On the four priority sectors, the Secretary General explained that their selection was because studies had shown that those sectors presented enormous opportunity for Africa to accelerate its import substitution drive.
Mr Akinyemi said “SMEs are the engines of growth and development and to achieve the US$16.2 trillion by 2050, there must be an intentional development of SMEs, and solve the critical challenge of lack of access to financing by SMEs.”
The partnership, he said, was aimed at breaking those financing barriers, make African SMEs increase their capacities and develop through training, innovative solutions and technology and be groomed to grow into multinational companies.
“Today, we export more than we process. We would want to be doing more processing and bring in the capabilities for them to process for example, cocoa not only into chocolate, but other by-products, as well as several other mineral resources we have across Africa, and create jobs,” the Group MD said.
He said he was confident that the collaboration between UBA and the AfCFTA Secretariat would leapfrog the development of SMEs in Africa, “…and make Africa that destination for investment and prosperity”
Ghana and the other 46 African countries that have ratified the AfCFTA agreement, including the 19 other operating countries of UBA – Republique du Benin, Burkina Faso, Cameroon, Congo Brazzaville, Congo DRC, Cote d’lvoire, Gabon, Guinea, Kenya, Liberia, Mali, Mozambique, Nigeria, Senegal, Sierra Leone, Tanzania, Tchad, Uganda and Zambia would benefit from the funding.
Two major eligibility criteria have been outlined for beneficiaries of the credit facility; the business must be an SME with a turnover of up to US$2.5m per year, and be an African entrepreneur or business.
