BCEAO training fosters growth in small business financing

Policymakers from across the AFI network took part in exclusive member training to narrow the financing gap for micro, small and medium enterprises (MSMEs) and foster economic growth through the shared exchange of practical knowledge and global best practices. 

More than 100 participants in 36 countries attended the three-day capacity building event, which was co-hosted by Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO), a long-time member of the AFI network and host of its regional office in Côte d’Ivoire. 

BCEAO Governor Tiémoko Meyliet Koné noted the importance of the virtual event in his opening remarks, reminding participants that while MSMEs form the backbone of many economies, particularly in developing and emerging markets, poor access to credit is limiting the sector’s potential. Making matters worse, COVID-19-related movement restrictions and disrupted supply chains forced the closure of many small businesses. 

“The stakes are enormous and the objectives to be achieved are important,” said Governor Koné. As significant creators of wealth and major sources of employment, particularly for young people and women, he added that it is crucial that financial regulators and other stakeholders nurture the conditions to grow and develop the sector. 

Roughly 80 percent of jobs stem from MSMEs in Africa. Despite this, between 2018 and 2020, only 13 percent of outstanding loans in BCEAO’s eight-country jurisdiction – Benin, Burkina Faso, Guinea-Bissau, Côte d’Ivoire, Mali, Niger, Senegal and Togo – were allocated to small businesses. Such disparities led BCEAO to set up a comprehensive financing mechanism for small and medium enterprises (SMEs) and institutions. 

Throughout the training, held on 4-7 October, experts from BCEAO offered insight and lessons into its mechanism, which was launched in 2015, including the role of commercial banks, credit institutions, supervisory structures and the central bank.  

As a champion of greater inclusivity, Governor Koné said that “an innovative approach is needed, based on minimizing the risks for small businesses … that allows for the promotion of new business models and reduced unemployment to support strong and inclusive growth.” 

“It requires a sharing of responsibility between the various stakeholders of the ecosystem,” he said. It was the first BCEAO-AFI capacity building event since member training on digital financial services interoperability in September 2020. 

AFI Executive Director Dr. Alfred Hannig praised BCEAO for its work in advancing the MSME financing agenda, saying that even during the worst of the pandemic, the central bank “implemented strong monetary policies that safeguarded the interests of small businesses across the region allowing them to weather the difficult times with resilience and fortitude”.  

He described the BCEAO’s SME financing mechanism as a “one-of-its kind regional initiative” that offered practical examples to members and united them in developing enabling ecosystems for MSMEs to access finance. 

Training also centered around AFI’s Policy Model on MSME Finance, which offers guidance to policymakers seeking to develop or review their MSME finance policies. Endorsed at AFI’s annual general meeting in September, the policy model outlines six pillars that reflect best practices from across the AFI network and external stakeholders involved in MSME development. Particularly attention was given to selected pillars with relevance to adverse impacts caused by the COVID-19 pandemic. 

Attention was also drawn towards AFI’s A Policy Framework for Women-led MSME Access to Finance. It guides regulators in ways to facilitate access to finance for women-led MSMEs. By building on and enhancing AFI’s collective knowledge, members learn from each other and gain meaningful insight into policymaking, leading to the implementation of policies that work towards achieving the network’s goal to leave no one behind. 

By the end of the training, participants were able to design effective MSME finance policies and develop action plans to enable improved access to finance for MSMEs in their jurisdictions. It was attended by senior officials from AFI member institutions who are developing policies and regulations, frameworks and guidelines for MSME finance as well as those managing COVID-19 response for MSMEs and women empowerment initiatives. Sessions were led by technical experts from within the network, BCEAO and AFI. 

The event was partially financed through AFI’s Multi-Donor Financial Inclusion Policy Implementation Facility, with participation of French Development Agency, the German Federal Ministry for Economic Cooperation and Development and the Ministry of Finance of the Grand Duchy of Luxembourg.