AfDB calls for business proposals to supply reliable SME credit information
The African Development Bank (AfDB) has launched an invitation for expression of interest (EOI) to develop SME credit information providers in Africa.Interested parties are invited to submit business proposals to the AfDB for the conduct of feasibility studies as needed to obtain adequate information to subsequently prepare viable business plans. Proposals for SME credit information providers covering single African countries and/or sub-regions are eligible. The motivation for this invitation emanates from the high level of informational asymmetry in credit markets documented in Africa, often considered as a key impediment to efficient SME financing, as well as from discussions AfDB held over the last year with different stakeholders in the financial sector. These discussions have indicated a need for the AfDB to take a leading role by facilitating the generation of ideas and business proposals to improve SMEs access to finance. The objective of the establishment of SME credit information providers is to address a market gap of reliable and comparable credit information on SMEs in Africa so that prospective lenders have a more objective and reliable basis to take lending decisions.
The emergence of new SME credit information providers should reduce information asymmetries in African credit markets, thereby mitigating risks for lenders. This should translate into improved access to finance and lower cost of capital for borrowers. With this initiative, AfDB expects to complement its efforts in supporting the financial infrastructure that allows African entrepreneurs receive funding for their businesses. While African SMEs account for close to 50% of employment, bank financing to SMEs in Africa remainsscarce, short-term, and more costly compared to other developing countries.
For more information, please refer to the Annoucements section of the MFW4A newsletter.