1. “Small and Medium Enterprises in Africa” Particular analysis through three selected African countries: Algeria, Ethiopia and South Africa.Presented byVitalii PeikoKrok-excl-09
2. SMEs play an essential role in the economic development of Africa by : Generating employments, tax revenues, Meeting the national demand, Increasing the exports, Decreasing the imports , Creating wealth.
3. Development of the SMEs: Major problems and solutions1. Current situation in Algeria, Ethiopia and South Africa2. Numerous barriers of the business environment3. Main solutions brought by the different actors Perspective : The global financial crisis
4. 1. Current situationin Algeria, Ethiopia and South Africa
5. 1.2 Main socio-politico-economical indicators Algeria Ethiopia South AfricaPopulation 33.9 83.1 48.6Education 10 years 6 years 9 yearsHealth Good Bad MediumUnemployment 14.10% 26.60% 16.70%Retirement Bad Awful BadConflicts With Marocco Possible NoneCorruption 3.2 2.3 5.1Activities Mainly Oil Mainly agriculture Mainly servicesInflation 2.50% 12.30% 4.60%Growth 3% 9.61% 13.30%Commercial -8.50% 12.60% 13.80% BalanceI.T. Medium Bad ExcellentInfrastructures Medium Bad Excellent
6. 1.3 Legal definition of SME• Algeria : • Between 1 and 250 persons • Turnover : less than €22.3 millions • no more than 25% of the capital is owned by one or more other companies• Ethiopia : • Microenterprises : turnover < than €1.600 • Small Enterprises : turnover < than €40.000• South Africa : • Divided in 4 categories : micro, very small, small and medium enterprises • Depending on the sector of activity of the SME • Workers : less than 200 • Turnover : less than €4millions
7. 2. Numerous barriers of the business environment
8. Business environment Low level ofEDUCATION African SME
9. 2.1 Low level of educationUnqualified entrepreuneurs :have difficulties to start and manage a business.Lack of skilled employees.
10. Business environment Low level of Limited access toEDUCATION FINANCE African SME
11. 2.2 Limited access to financeBecause of :- the under developped financial market,- the information asymmetry,- not enough collateral. High interests’ rate, Refusal of credit’s demand, Lack of external financings.
12. Business environment Low level of Limited access to EDUCATION FINANCE Unwieldy AfricanADMINISTRATION SME
13. 2.3 Unwieldy AdministrationBecause of :- Taxation,- Corruption,- Complexity of the procedures,- Inefficient regulation… Makes difficult to do business, Can cost a lot.
14. Business environment Low level of Limited access to EDUCATION FINANCE Unwieldy African Insufficient and deficientADMINISTRATION SME INFRASTRUCTURES
15. 2.4 Insufficient and deficient Infrastructures Limited access to : - Energy, Water … - Internet, Telecom … - Roads, Airports…Generates areas with limited possibilities,Makes difficult to do business,Leads to high costs.
16. Business environment Low level of Limited access to EDUCATION FINANCE Unwieldy African Insufficient and deficitentADMINISTRATION SME INFRASTRUCTURES Small local market for SUPPLIERS & CUSTOMERS
17. 2.1 Small local market for suppliers and customers Because of : - Narrow domestic markets, - Tariffs and conflicts limit cross-border exchanges.Makes difficult to find reliable suppliers,Leads to high transport costs to export,Complicates the way to do business.
18. Business environment Low level of Limited access to EDUCATION FINANCE In South Africa Insufficient and deficitent Unwieldy In Algeria INFRASTRUCTURESADMINISTRATION In Ethiopia Small local market for SUPPLIERS & CUSTOMERS
19. 3. Main solutions brought by the different actors
20. GOVERNMENTS African SME
21. 3.1 Governments Algeria Ethiopia South AfricaMinistry for SMEs Chamber of Commerce Department of Tradeand craft industry « in process… » and IndustryImportant SME’s No SME’s development Very important SME’sdevelopment policy policy development policysince 2001 since 1994
22. GOVERNMENTS-Provide training,-Attract foreign direct investment,-Facilitate access to infrastructures,-Adapt the taxation,-Facilitate the administrative environment. NETWORKS & African CLUSTERS SME
23. 3.2 Networks & ClustersCluster =« Group of SMEs from one industry sector that team up and act as one body. »Network =« Group of companies which are linked by means of individual connections. »
24. GOVERNMENTS -Provide training, -Attract foreign direct investment, -Facilitate access to infrastructures, -Adapt the taxation, -Facilitate the administrative environment.Financial institutions & NETWORKS &Private equity African CLUSTERS SME -Provide information, -Share experiences, -Make economies of scale, -Facilitate access to finance.
26. GOVERNMENTS -Provide training, -Attract foreign direct investment, -Facilitate access to infrastructures, -Adapt the taxation, -Facilitate the administrative environment.Financial institutions & NETWORKS &Private equity African CLUSTERS-Reduce the info asymmetry, SME -Provide information,-Increase equity, -Share experiences,-Generate collateral. -Make economies of scale, -Facilitate access to finance.
27. What is the level of development of african SMEs ?• Overall, a good trend of SME’s development• Above all in South and North Africa But a threat for the future… the global financial crisis
28. Perspective : The global financial crisis• Consequences : - currencies devaluation - drop of commodity prices - cutback in foreign capital inflows Slowing down of the recent SME’s development improvment