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SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
SMEs In Africa
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SMEs In Africa

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  • So as to do comparative analysis among the three countries it was important to look at the size of SNEs in each country. I am very much worried by the extremely low number of SMEs in Ethiopia.
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  • 1. “ Small and Medium Enterprises in Africa” January 2009 Florie THIELIN Julien DE BENEDITTIS Master 1 International Business Particular analysis through three selected African countries: Algeria, Ethiopia and South Africa.
  • 2. <ul><li>SMEs play an essential role in the economic development of Africa by : </li></ul><ul><ul><ul><li>Generating employments, tax revenues, </li></ul></ul></ul><ul><ul><ul><li>Meeting the national demand, </li></ul></ul></ul><ul><ul><ul><li>Increasing the exports, </li></ul></ul></ul><ul><ul><ul><li>Decreasing the imports , </li></ul></ul></ul><ul><ul><ul><li>Creating wealth. </li></ul></ul></ul>
  • 3. Development of the SMEs: Major problems and solutions <ul><li>Current situation in Algeria, Ethiopia and South Africa </li></ul><ul><li>Numerous barriers of the business environment </li></ul><ul><li>Main solutions brought by the different actors </li></ul><ul><li>Perspective : The global financial crisis </li></ul>
  • 4. <ul><li>Current situation in Algeria, Ethiopia and South Africa </li></ul>
  • 5. 1.1 Why did we choose these 3 countries ?
  • 6. <ul><li>Algeria </li></ul>Ethiopia South Africa Population 33.9 83.1 48.6 Education Health Unemployment 10 years 6 years 9 years Good Infrastructures Retirement Conflicts Corruption Activities Inflation Growth Commercial Balance I.T. Bad Medium 14.10% 16.70% 26.60% Bad Awful Bad With Marocco 3.2 Mainly Oil 2.50% 3% -8.50% Medium Medium Possible None 2.3 5.1 Mainly agriculture Mainly services 12.30% 4.60% 9.61% 13.30% 12.60% 13.80% Bad Excellent Excellent Bad 1.2 Main socio-politico-economical indicators
  • 7. <ul><li>Algeria : </li></ul><ul><ul><ul><li>Between 1 and 250 persons </li></ul></ul></ul><ul><ul><ul><li>Turnover : less than €22.3 millions </li></ul></ul></ul><ul><ul><ul><li>no more than 25% of the capital is owned by one or more other companies </li></ul></ul></ul><ul><li>Ethiopia : </li></ul><ul><ul><ul><li>Microenterprises : turnover < than €1.600 </li></ul></ul></ul><ul><ul><ul><li>Small Enterprises : turnover < than €40.000 </li></ul></ul></ul><ul><li>South Africa : </li></ul><ul><ul><ul><li>Divided in 4 categories : micro, very small, small and medium enterprises </li></ul></ul></ul><ul><ul><ul><li>Depending on the sector of activity of the SME </li></ul></ul></ul><ul><ul><ul><li>Workers : less than 200 </li></ul></ul></ul><ul><ul><ul><li>Turnover : less than €4millions </li></ul></ul></ul>1.3 Legal definition of SME
  • 8. 2. Numerous barriers of the business environment
  • 9. African SME Low level of EDUCATION Business environment
  • 10. 2.1 Low level of education <ul><li>Unqualified entrepreuneurs : </li></ul><ul><li>have difficulties to start and manage a business. </li></ul><ul><li>Lack of skilled employees. </li></ul>
  • 11. African SME FINANCE Low level of EDUCATION Limited access to Business environment
  • 12. 2.2 Limited access to finance <ul><li>Because of : </li></ul><ul><li>the under developped financial market, </li></ul><ul><li>the information asymmetry, </li></ul><ul><li>not enough collateral. </li></ul><ul><li>High interests’ rate, </li></ul><ul><li>Refusal of credit’s demand, </li></ul><ul><li>Lack of external financings. </li></ul>
  • 13. African SME FINANCE ADMINISTRATION Low level of EDUCATION Limited access to Unwieldy Business environment
  • 14. 2.3 Unwieldy Administration <ul><li>Because of : </li></ul><ul><li>Taxation, </li></ul><ul><li>Corruption, </li></ul><ul><li>Complexity of the procedures, </li></ul><ul><li>Inefficient regulation… </li></ul><ul><li>Makes difficult to do business, </li></ul><ul><li>Can cost a lot. </li></ul>
  • 15. African SME FINANCE INFRASTRUCTURES ADMINISTRATION Low level of EDUCATION Limited access to Unwieldy Insufficient and deficient Business environment
  • 16. 2.4 Insufficient and deficient Infrastructures <ul><li>Limited access to : </li></ul><ul><li>Energy, Water … </li></ul><ul><li>Internet, Telecom … </li></ul><ul><li>Roads, Airports… </li></ul><ul><li>Generates areas with limited possibilities, </li></ul><ul><li>Makes difficult to do business, </li></ul><ul><li>Leads to high costs. </li></ul>
  • 17. African SME FINANCE INFRASTRUCTURES ADMINISTRATION Low level of EDUCATION Limited access to Unwieldy Insufficient and deficitent Small local market for Business environment SUPPLIERS & CUSTOMERS
  • 18. 2.1 Small local market for suppliers and customers <ul><li>Because of : </li></ul><ul><li>Narrow domestic markets, </li></ul><ul><li>Tariffs and conflicts limit cross-border exchanges. </li></ul><ul><li>Makes difficult to find reliable suppliers, </li></ul><ul><li>Leads to high transport costs to export, </li></ul><ul><li>Complicates the way to do business. </li></ul>
  • 19. In South Africa In Algeria In Ethiopia FINANCE INFRASTRUCTURES ADMINISTRATION Low level of EDUCATION Limited access to Unwieldy Insufficient and deficitent Small local market for Business environment SUPPLIERS & CUSTOMERS
  • 20. 3. Main solutions brought by the different actors
  • 21. GOVERNMENTS African SME
  • 22. 3.1 Governments Algeria Ethiopia South Africa Ministry for SMEs and craft industry Important SME’s development policy since 2001 Chamber of Commerce « in process… » No SME’s development policy Department of Trade and Industry Very important SME’s development policy since 1994
  • 23. GOVERNMENTS <ul><li>Provide training, </li></ul><ul><li>Attract foreign direct investment, </li></ul><ul><li>Facilitate access to infrastructures, </li></ul><ul><li>Adapt the taxation, </li></ul><ul><li>Facilitate the administrative environment. </li></ul>NETWORKS & CLUSTERS African SME
  • 24. 3.2 Networks & Clusters Cluster = « 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. »
  • 25. GOVERNMENTS <ul><li>Provide training, </li></ul><ul><li>Attract foreign direct investment, </li></ul><ul><li>Facilitate access to infrastructures, </li></ul><ul><li>Adapt the taxation, </li></ul><ul><li>Facilitate the administrative environment. </li></ul>NETWORKS & CLUSTERS <ul><li>Provide information, </li></ul><ul><li>Share experiences, </li></ul><ul><li>Make economies of scale, </li></ul><ul><li>Facilitate access to finance. </li></ul>African SME Financial institutions & Private equity
  • 26. 3.3 Financial institutions and private equity - Banks - Micro-credit institutions - Guarantee companies - Private equity
  • 27. GOVERNMENTS <ul><li>Provide training, </li></ul><ul><li>Attract foreign direct investment, </li></ul><ul><li>Facilitate access to infrastructures, </li></ul><ul><li>Adapt the taxation, </li></ul><ul><li>Facilitate the administrative environment. </li></ul>NETWORKS & CLUSTERS <ul><li>Provide information, </li></ul><ul><li>Share experiences, </li></ul><ul><li>Make economies of scale, </li></ul><ul><li>Facilitate access to finance. </li></ul>Financial institutions & Private equity African SME <ul><li>Reduce the info asymmetry, </li></ul><ul><li>Increase equity, </li></ul><ul><li>Generate collateral. </li></ul>
  • 28. What is the level of development of african SMEs ? <ul><li>Overall, a good trend of SME’s development </li></ul><ul><li>Above all in South and North Africa </li></ul>But a threat for the future… the global financial crisis
  • 29. Perspective : The global financial crisis <ul><li>Consequences : </li></ul><ul><li>- currencies devaluation </li></ul><ul><li>- drop of commodity prices </li></ul><ul><li>- cutback in foreign capital inflows </li></ul>Slowing down of the recent SME’s development improvment
  • 30. Ressources : <ul><li>Economic commision for Africa: www.uneca.org </li></ul><ul><li>United Nations: www.un.org </li></ul><ul><li>Organisation for economic co-operation and development: www.oecd.org </li></ul><ul><li>African development bank group: www.afdb.org </li></ul><ul><li>The International Monatery Fund: www.imf.org </li></ul><ul><li>The European Commission: http://ec.europa.eu </li></ul><ul><li>African economic news: www.afrikeco.com </li></ul><ul><li>Trade & Industrial policy strategies: www.tips.org.za </li></ul><ul><li>Cap Afrique: www.capafrique.org </li></ul><ul><li>AllAfrica Global Media: http://allafrica.com </li></ul><ul><li>The Investment Climate Facility for Africa: www.icfafrica.org </li></ul><ul><li>Overview of African SME research: www.sbaer.uca.edu/Research/icsb/2003/papers/66.doc </li></ul><ul><li>Foreign trade: http://www.missioneco.org/me/ </li></ul><ul><li>Corruption in the three selected countries: http://www.transparency.org/ </li></ul><ul><li>Craft industry and SME Algerian Ministry: www.pmeart-dz.org </li></ul><ul><li>Ethiopian Business Development Services Network (EBDSN): www.bds-ethiopia.net </li></ul><ul><li>Chamber of commerce of Addis in Ethiopia: www.addischamber.com </li></ul><ul><li>Ministry of Foreign Affairs of Ethiopia: www.mfa.gov.et </li></ul><ul><li>Doing business with South Africa: www.southafrica.info/business </li></ul><ul><li>Department of Trade and Industry of South Africa: www.thedti.gov.za </li></ul>

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