Q&A session with Jean Philippe Prosper, IFC Vice President
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The document outlines various initiatives by the IFC to support young African entrepreneurs through awards, financing programs, and training resources. Key programs include the SME Toolkit, financing through local institutions, and infrastructure investments aimed at fostering economic growth. Additionally, IFC focuses on improving access to finance for small and medium enterprises while emphasizing the importance of specialized training to enhance management skills and productivity among entrepreneurs.
Q&A session with Jean Philippe Prosper, IFC Vice President
- 1. @africaceoforum Q&A session with Jean-Philippe Prosper, IFC 1. What projects are planned to give visibility to the innovations of young Africans? RESPONSE: SA Entrepreneur Award and others raise visibility. bit.ly/13yo3fG Find SME Toolkit for your country. bit.ly/1oNHzbU I am very excited that rapid growth in the region is unleashing innovations from young African talent. Recognizing entrepreneurs and helping them gain better access to finance is important. IFC has a range of programs to support and give visibility to early-stage businesses and entrepreneurs. To give just one example of how we are providing increased visibility, IFC initiated a Young Entrepre-neur Business Plan competition in South Africa, encouraging entrepreneurs under 35 to apply. The competition was launched through the South Africa SME Toolkit website that is an innovation of IFC and IBM. The awards program was also sponsored Business Partners Limited, who we have worked with in different markets to incubate and finance growing small and medium busi-nesses. The competition has expanded in the last few years under Business Parnters leadership and continues be organized through the SME Toolkit (http://southafrica.smetoolkit.org/sa/en/content/ en/55330/Winner-announced-for-competition-acknowledging- aspiring-young-entrepreneurs). There are other examples in DRC, Liberia, Nige-ria, among other countries, of entrepreneurs and their businesses supported by IFC being reco-gnized by IFC or third party awards for the high quality of innovation in entrepreneurship. This type of visibility is significant. It brings entrepre-neurs’ work to the attention of the larger business community and to prospective financiers. It is an important way to help entrepreneurs find the sup-port they need. 2. What are the available financing programs for African entrepreneurs? RESPONSE: Microfinance, specialized funds, inst that focus on SMEs are all critical to access to finance for start ups in Africa. African entrepreneurs need more than just fi-nancing, but, of course, money is important for expanding businesses. There are a lot of tools IFC has at its disposal to ensure that entrepre-neurs are able to develop their ideas. To reach the largest number of businesses and make sure that entrepreneurs get the full range of support and service they need, IFC’s finan-cing to smaller businesses is largely delivered through local financial institutions and funds. For example, IFC has supported the largest network of greenfield microfinance institutions in Sub-Saharan Africa. We are helping networks like Accion and FINCA expand in West and Central Africa. IFC is also helping financial institutions that
- 2. Q&A session with Jean-Philippe Prosper, IFC specialize in small and medium enterprises. We have helped banks like Sasfin and Mercantile Bank in South Africa. We are also helping the largest banks in the South Africa expand their SME lending. In some of the smaller markets, we have encouraged specialized funds that focus on smaller businesses. For example, IFC has supported the creation of the the West Africa Venture Fund in Liberia and Sierra Leone and the Central Africa SME Fund. Another interesting program IFC has suppor-ted is the Africa Micro, Small, and Medium Enterprise Finance Program. This program has supported nearly 30 banks with financing and advisory services that help them establish or expand lending to microenterprises and SMEs. Leasing can provide an alternative financial me-chanism for small enterprises in the region, but the legal and regulatory environment needs to be in place first. In partnership with Switzerland and other development partners, IFC launched the Africa Leasing Facility to increase access to finance for small businesses in 15 countries. The program sought to create an enabling envi-ronment for the leasing sector by drafting lea-sing laws and regulations, raising public aware-ness, and publishing market reports. We also built the capacity of lessors and other stakehol-ders through training and by providing banks and other financial institutions with in-depth advisory services. At the end of the first phase in 2012, the pro-gram had trained more than 10,500 people, drafted about 30 leasing laws or regulations (16 of which were enacted), completed about 30 leasing assessments, and provided advisory services to close to 80 entities. For example, with the project’s support, the Cameroonian government passed a leasing law that has stimulated the sector, increasing lea-sing volumes to almost $200 million in 2011, and established an association of Cameroonian lease providers. So IFC’s support for access to finance is delive-red through a wide range of projects and pro-grams. 3. Does IFC propose or supports training programs for young African Entrepreneurs? RESPONSE: SME Toolkit bit.ly/1oNHzbU and Business Edge bit.ly/1zA3m02 are part of IFC’s SME Management Solutions Africa Program. http://www.businessedge-africa.com/ http://www.smetoolkit.org/smetoolkit/en Training is very important to help start-up busi-nesses grow. While small businesses may have a rapid start, they often fail to capitalize on growth because productivity of SMEs can be very low. Entrepreneurs often want to upgrade skills and that of their staff, but the quality and price of management information and training is mixed. It ranges from subsidized services of varied quality to focused corporate offerings aimed at senior executives. One solution has been the SME Management Solutions Africa program. The aim of the pro-gram is to address these management skills gaps and increase the performance, growth, and revenues of small businesses in the region, and expand their access to markets, by 2014. The program has set up a reliable market infor-mation system for one million small businesses by using the SME Toolkit, an IFC online training plat-form that helps to improve management prac-tices and share other relevant information. It has also offered scalable and sustainable platforms to deliver management training to 15,000 small business managers. This is delivered through Business Edge, an IFC product delivered by local trainers that strengthens the management skills of small business owners. This program covered 22 countries and resulted in 23,253 small businesses receiving IFC-facilitated training, of which 9,219 were women entrepreneurs.
- 3. Q&A session with Jean-Philippe Prosper, IFC 4. Are there structures in Africa, state or private, specialized in supporting young entrepreneurs? RESPONSE: Entrepreneurs should participate in local business associations, work with financiers with vested interest in your success. There are a range of resources available, although they may not seem accessible in many situations, particularly to the smallest businesses. We encou-rage entrepreneurs to participate in local business associations to learn about what is available in your market. One of the tools that IFC has used to encourage entrepreneurs to improve their perfor-mance has been to support specialized funds and microfinance institutions. Financiers can develop a relationship with their clients that help them address needs that are holding back growth. In coordination with a fund established with Busi-ness Partners International in Kenya, for example, we supported a business incubation center 5. How is IFC Africa supporting media startups ? RESPONSE: IFC aims to improve access to info infra and svcs, and media to promote innovation and grassroots entrepreneurship. IFC focuses on improving access to information in-frastructure and services, as well as using media to expand the delivery of public and private services and promote innovation in industry and grass-roots entrepreneurship. Access to these services is fundamental to expanding the reach of develop-ment. In Africa, this has translated largely into sup-port for mobile telecom operators, related voice and data infrastructure, and supporting a range of technology oriented projects and funds. 6. What are the outlines of IFC Africa’s infrastructure financing strategy? RESPONSE: IFC puts a priority on infrastructure that spurs economic growth and improves living standards. Power is priority #1. IFC puts a priority on infrastructure that spurs economic growth and improves living standards. IFC invested $1.1 billion in infrastructure projects across sub Saharan Africa in our 2014 fiscal year. A few examples of how our priority is playing out in different markets. This included Cote d’Ivoire’s Azito, CIPREL thermal power plant and the Sin-gida Wind Farm in Tanzania, which will improve power supply and ease shortages. Under the World Bank Group Energy Busi-ness Plan, which brings together the policy expertise of the World Bank and the capacity of MIGA to mitigate risk and mobilize gua-rantees, IFC aims to catalyze investments to add 1,500 megawatts of capacity to the Nige-rian national grid. The added capacity should provide electricity for up to 8.0 million house-holds over the next 18 months.
- 4. Q&A session with Jean-Philippe Prosper, IFC 7. What does the IFC do to close the access to finance gap for SMEs, and innovators? RESPONSE: IFC is supporting a range of specialized financial institutions, and programs aimed at smaller businesses. I would refer back to the earlier question on what we are doing to help finance entrepreneurs in Africa, where I cited a number of projects and programs that are helping create more access to finance. I would also draw your attention to the Partnership for Financial Inclusion is a joint initiative of IFC and The MasterCard Foundation to expand microfi-nance and advance mobile financial services in Sub-Saharan Africa. The Partnership is also sup-ported by the Bill & Melinda Gates Foundation and the Development Bank of Austria (OeEB, Oesterreichische Entwicklungsbank AG), and col-laborates with knowledge partners such as the World Bank and the Consultative Group to Assist the Poor, CGAP. The program aims to increase access to financial services through technological innovation and support trends in this area. There are also efforts that IFC is undertaking to increase productivity and innovation in critical sectors of the economy. In Africa, more than any other industry, agribusiness has the potential to reduce poverty and drive economic growth. Agriculture accounts for nearly half of the conti-nent’s GDP, and employs 60 percent of the labor force. The World Bank estimates that by 2030, agriculture could develop into a $ 1 trillion in-dustry in Sub-Saharan Africa. So this is an impor-tant industry, where we are looking for innovators across the sector who can innovate. By focusing on intensifying agricultural produc-tion with improved, sustainable practices, Afri-can agriculture can transform the continent. This means focusing on agricultural models that are resilient to climate change and that make the most of scarce resources, such as water. It also means working closely with smallholder farmers, who represent 80% of all farms on the continent and almost 90% of all food crop pro-duction. IFCs sees the private sector playing a crucial role in addressing agriculture’s pressing challenges – such as expanding production, climate change, resource efficiency and clean energy. IFC contri-butes most directly in this sector towards access to finance. We fund large, transformational projects, and work with banks, traders, and other interme-diaries of all sizes to ensure that finance reaches small farmers. We are also helping growing com-panies improve their environmental and social standards, create more innovative supply chains, and supporting infrastructure to help this sector grow. 8. Is financing infrastructure projects the best way to support the African Private Sector? RESPONSE: There is no question that that Africa rapidly improve its infrastructure to manage growth and improve living standards. There is no question that if Africa does not rapi-dly improve its infrastructure that it will not be able to manage growth. Let me take this oppor-tunity to also address why infrastructure is so important in Africa, and especially in fragile and conflict situations that are sadly too prevalent on the continent. Today, almost 450 million people live in fragile and conflict situations. The World Bank Group has classified over 30 countries and territories around the world as FCS, with most of them in Africa.
- 5. Q&A session with Jean-Philippe Prosper, IFC By 2030, nearly half of the world’s poor will be living in countries affected by fragility and conflict. Today, IFC’s investment in these mar-kets makes up only about $1 billion of the $22 billion IFC committed and mobilized last year, but we expect to see this figure rise in coming years. In FCS, where inequality and unemploy-ment are high and infrastructure is destroyed, most jobs are in the informal sector. Economic growth is fragile and will only happen if private enterprises are able to grow, create employment, provide the goods and services people need, and generate the tax revenue that allows governments to provide essential services.The private sector cannot develop in a vacuum. We need an approach that works together with government and leverages the power of the World Bank and our development partners. I’ll finish with a specific example of how infras-tructure can be developed in countries emer-ging from a conflict, and how it can become a focal point for further development, as it was in Cote d’Ivoire. Azito Power Plant IFC worked with the government, WBG par-tners and other DFIs to meet growing electricity demand. To modernize the country’s worn-out Azito power plant IFC arranged a $345-million pac-kage funded by five European development finance institutions and the West African Deve-lopment Bank, and provided $125 million of its own funds The World Bank put in place the regulatory fra-mework for investing in the sector and MIGA provided political risk insurance to the investors. Today, Azito is one of sub Saharan Africa’s largest independent power generators and will produce 50% more energy without using addi-tional gas, serving 2 million more people.