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.