SMEs Should Focus On Asset Management Firms For Funding– Emodi

The Managing Director, Anchoria Asset Management, Azubike Emodi, has said that Small and Medium Enterprises in Africa need to reduce their reliance on commercial banks for financing.

According to the MD, small businesses in the continent should consider asset management firms and other financial institutions as viable funding options.

Emodi said this at the ongoing African Union 2020 EXPO with theme, ‘Opportunities in the banking and finance sector/financing trade and investment in Africa.’

The Africa CEO’s Round Table Conference was held at the Dubai Exhibition Centre on Monday.

Africa is home to millions of small businesses. In Nigeria alone, there are about 17.4 million SMEs which accounts for about 50 per cent of industrial jobs and nearly 90 per cent of the manufacturing sector, according to the National Bureau of Statistics.

According to a World Bank Report, 600 million jobs will be needed by 2030 to absorb the growing global workforce making SME development a huge priority.

The World Bank and other financial institutions have said that access to finance is a key obstacle to SMEs growth.

Emodi said, “With SMEs as you all know, capital goes to where it is comfortable and the same issue is what we have at the global level.”

The MD admitted that local financial institutions find it difficult to fund SMEs because, “in some cases they have overgrown the SMEs and in some cases the cost of sustaining those transactions may hinder their operations.”

He added, “But, what we need to do at this point as we transition into Africa is to invest collectively. We need to look at how we could more or less train those SMEs and create platforms that will allow other financial institutions to come in and prepare them to a point where it is also easy for them to access financing other than banking institutions.

“We have asset management firms that can also give some form of financing. We have seen in recent times that those private equity firms that the SMEs typically fall back to.

“But they still have the same challenge of getting their operations to the point where they don’t have insurance to give them that support.”

Emodi said apart from training, SMEs also need stakeholders’ support through networking.

“What we can do for SMEs to grow is to not just train them, but also partnership from other stakeholders to see how we can find areas where there are competitive advantages and now channel effort to those areas.

“You can bring one or two companies together; you can bring two corporates together with AfCFTA in place, you can also do some inter country operations,” Emodi said.

He told participants that the AfCFTA would accelerate networking between SMEs in different African countries which would in turn boost their revenues.

Emodi explained further that African asset management accounts for $1trn of the $100trn global asset under management.

The CEO estimated that assets under management in Africa would grow to $10trn by 2032, adding that this would contribute to the growth of SMEs and the local economies.

Emodi said, “If asset management is supported by both the regulators and the practitioners, if we curtail illegal financing flow outside the region, we will see more growth in the asset management sector.

“We expect that asset management should grow at about $10trn in the next ten years and this will provide enough firepower to also support the local economy.”

ENDS