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Bank financing to SMEs in East Africa
Pietro Calice's article is very interesting, but I can not find the paper co-authored with Victor Chando and Sofiane Sekioua mentioned in the article, which is frustrating.
Banks Financing to SMEs in East Africa
Dear Pietro,
Excellent paper. I have enjoyed very much reading it. Do you know if similar work exist for Banks financing in West Africa? Thank you.
SME Finance
All I ever hear about in relation to SME financing is bank finance, with wise words about collateral and creditor rights. No one ever mentions equity finance. Most small companies start with equity and then finance themselves from internally generated funds. Bank finance is quite inappropriate for 'investment' , a much maligned word. Banks do not - quite reasonably given the structure of their liabilities - lend long term; bank finance is classically revolving cash flow finance to fund stocks and debtors when a company is growing its sales rapidly and generating plenty of cash to repay debt. So where is the equity finance for small companies in Africa. And I don't mean 'private equity' since PE funds are not interested in anything under $25 million, often impose tough conditions and are always looking for an 'exit' (which means, by the way, take your profit as fast as possible and get out). Real equity is permanent capital wqhere shareholders take the shocks of bad years, whereas banks with all their collateral and creditor rights are quick to pull the plug. No small business owner but an idiot, therefore, would wish to rely on banks to finance investment.