According to Dr Laverley, women entrepreneurs face even steeper challenges. Women own 40 percent of SMEs but receive less than 20 percent of available financing.
Dar es Salaam. The African Development Bank (AfDB) has called for bold reforms and innovative financial mechanisms to expand access to funding for Africa’s small and medium enterprises (SMEs), who account for over 90 percent of businesses on the continent.
The AfDB Country Representative in Tanzania, Dr Patricia Laverley, said in an interview that despite their crucial role in job creation and economic growth, most African SMEs remain underserved by the financial system.
“If 90 percent of Africa’s businesses remain inadequately financed, then Africa remains largely unbanked,” she said.
Dr Laverley noted that SMEs generate nearly 80 percent of jobs across Africa but face a financing gap estimated at $330 billion, according to AfDB data. “This isn’t a funding problem—it’s a system failure,” she said.
She explained that Africa leads the world in entrepreneurship, with one in five working-age Africans starting a business. By 2050, the continent will have 850 million young people—half of Africa’s working-age population, she said, adding that the continent cannot afford to let this generation’s creativity go unfunded.
According to Dr Laverley, women entrepreneurs face even steeper challenges. Women own 40 percent of SMEs but receive less than 20 percent of available financing. Many are unable to access the capital they need to grow and are therefore excluded from full economic participation.
She called for targeted interventions to address gender-based barriers in financing.
She also pointed to cash flow challenges caused by delayed payments from large clients, which affect 62 percent of African SMEs. “Payment cycles stretch from 30 to 120 days. In finance, cash flow is oxygen. For Africa’s emerging enterprises, delayed payments are suffocation,” she said.
Dr Laverley outlined several measures that could transform the SME financing landscape, including policy reforms and the adoption of innovative financial instruments.
“Governments could design creative tax incentives for start-ups and mandate shorter payment terms for SME contracts,” she suggested. “Financiers must also deploy more capital intermediaries to bridge global capital with local SMEs, redefine collateral beyond fixed assets, and include future receivables as viable security.”
She further urged the increased use of blended finance, which combines public and private capital to de-risk investments and channel funding towards high-impact sectors.
“Dormant public capital, such as pension funds, can be strategically deployed to unlock private investment and provide sustainable support to SMEs,” Dr Laverley said.
“With increased access to finance for SMEs, growth will stop being a buzzword and become a breakthrough,” she said.
