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Research You Should Know 0

African Firms Have Great Difficulty Accessing Capital

By Endeavor Insight · On December 18, 2013

A new report from the African Development Bank highlights the promise of high-growth entrepreneurs in Africa. It also shares powerful data on unique challenges that these founders face when they need to raise capital.

“Using one-year growth rates in employment as a measure of firm growth shows that about 15% of SMEs in both Africa and other developing countries are high-growth firms (i.e., with one-year growth in employment greater or equal to 20% (OECD, 2008)). However, there are important differences in the sources of financing used to finance this growth: In Africa, 84% of investments of SMEs are financed through internal funds compared with 70% in other developing economies. The share of bank financing in Africa is 8% (compared to an average of 11% in other developing countries) while the share of equity financing in Africa is less than 2%, as compared to about 8% in other developing economies.” (Page 54)

You can download the full report from the African Development Bank here.

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