SME Creation & Development Support Mechanism - Feasibility Study (FIGA)
Supporting small and medium-sized enterprise creation and development is an essential issue for developing countries. SMEs represent the fine mesh of a country’s economy. They are likely to make a major contribution to economic and social growth and to job creation (starting with the promoter’s own job creation). A strong and diversified SME fabric conveys a better redistribution of wealth and political stability.
BBA has studied the feasibility of a support mechanism for SME creation and development, in the traditional sectors (trade, agriculture, construction and services), based on tried and tested tools both in Europe and in the rest of the world, especially in Africa.
This study was carried out in the Republic of Congo for reasons of expedience – at the express request of the Government of Brazzaville and with the support of the Federal Minister for SMEs - but it is transposable both geographically and “sectorially” i.e., in a strict sense, into certain particular sectors of the economy or, more broadly, for some specific target groups (young people emerging from technical education, women, ex-army men, the Diaspora,…) according to the available means and/or the prioritised objectives.
This mechanism allows the joint intervention of three additional funds:
- A Coaching Fund that ensures the creditworthiness of the request/needs for accompaniment of projects in the financial technique field (especially the drafting of business plans and “bankable” financial plans);
- An Economic Impulsion Fund that grants loans complementing the credit granted by a commercial bank or a microfinance institution in a co-financing and risk-sharing rationale;
- A Guarantee Fund that enables the financial institution to cover a part of its own risk.
The proposed mechanism’s originality is based on the overall dimension of the approach to SME financing problems and on the integrated nature of the tools, which enables coordinated and therefore more effective solutions to be given to the following problems:
- The weakness of the technical knowledge necessary for the development of a business plan and/or a financial plan that could to be of interest to a financial institution;
- The lack of own funds;
- The insufficiency of the guarantees.
Status : Closed
Date : 10-2008 -> 01-2009
Countries : Congo [Republic]