BELMONT, Massachusetts — It’s time for some good news. While Boko Haram violence, the Ebola outbreaks, and the AIDS epidemic have garnered international concern for Sub-Saharan Africa, they have also veiled the continent’s promising future.
In the coming years, Africa will actually experience a significant economic boom with a global impact. According to an International Monetary Fund Economic Outlook Report, “by 2035, the number of Africans joining the working age population (ages 15–64) will exceed that from the rest of the world combined.”
This substantial increase accounts for 100 million people and is only expected to extend further. By 2050, the number of working-age people in Africa should stand at around 1.25 billion.
In light of recent strife, this may come as a surprise to many. Yet, after looking at Africa’s track record in the past few years, it actually makes sense. While recent economic down turns in China and the E.U. have caused stagnation and slow growth, Sub-Saharan Africa has only grown. Even after the Ebola crisis, the region is expected to register an impressive 4.5 percent annual growth rate by the end of 2015.
How exactly has the region sustained this growth, then?
Small and medium-sized enterprises, or SMEs, have become the pillars of this burgeoning economy. In fact, they produce 80 percent of all jobs and represent nearly 90 percent of all businesses in Sub-Saharan Africa. Thanks to SMEs, Sub-Saharan Africa has a growing middle class that drives the production of more commodities.
For these small but mighty providers, investment remains crucial. Without a solid investment climate that breaks down barriers for business owners, SMEs find themselves strangled by restrictions and inadequate management and logistics.
Mindful of this, the African Development Bank has launched a number of initiatives to support the growth of SMEs in Sub-Saharan Africa. Its Africa Small and Medium Businesses Program plans to provide assistance to African financial institutions that support SME growth over the course of four years. It has received an impressive $125 million in funding from the United States.
The AfDB has sponsored a similar program in Burkina Faso, where it has 2.5 million euros in credit to Fidelis Finance, one of the county’s largest providers of SME Loans. Up to 70 SME’s will receive financing through this initiative. In total, this minor contribution could facilitate up to 500 jobs among companies receiving loans from Fidelis.
Another group, Fund for African Private Sector Assistance, has also worked toward bolstering the efforts of African businesspersons. It has established a scholarship called “Future Leaders,” which pays to send 46 top students in Angola to the Zurich University of Applied Sciences to glean business skills. It established a $250 million private equity fund that helps African businesses that struggle financially.
Some Sub-Saharan countries themselves caught on to the need for investment. Angola, in particular, has made strides toward helping SMEs with its program called Kijinga. It aims to help support beginning business owners on the periphery of cities through financial assistance and skill training.
– Andrew Logan