FINANCING OF SMEs : Inclusive Bonds Issues Planned for 2024
Financial stakeholders have joined Cameroon via the Minister of Trade, Luc Magloire Mbarga Atangana to formalize the modalities and the commitments necessary for the launch of inclusive Bonds Issue by 2024. This was during a workshop held in Yaounde on December 19.
Initiated in 2020 by the FinAfrique firm, this Inclusive Bonds concept aims to improve the conditions for access to financing for the most vulnerable entrepreneurial stratum constituted by very small and medium-sized enterprises (SMEs) and the informal sector. It consists of raising funds on the financial market (Bvmac), allocated to local microfinance institutions so that they finance SMEs and the informal sector. For the pilot phase, two sectors are targeted. It is about artisanal processing and cross-border trade, hence the strong involvement of the Minister of Commerce. Luc Magloire Mbarga Atangana who also chaired the closing ceremony of the dialogue workshop on the Inclusive Bonds project and received the executive Director of FinAfrique, Fabrice Kom Tchuente.
« The main form of formal financing available to this segment of the private sector is microfinance. Indeed, the popularity of microfinance institutions reveals a financing model adapted to small economies, but this sector unfortunately has insufficient resources to meet the demand facing it. Moreover, the practice of usurious rates by many microfinances increases the repayment conditions for borrowers, which does not facilitate their access to a higher level of their activity », says, Fabrice Kom Tchuente.
This consulting firm, whose vocation is to support African institutions in their quest for performance, explains that its approach thus consists « in proposing a new financing mechanism that takes into account the socio-cultural and economic characteristics of Africa specific to SMEs and informal activities ». This financing, he says, presents itself as both an “alternative” and a “complement” to the already existing financing, but above all an “affordable financial solution” for vulnerable entrepreneurial strata.
As part of this concept, the state and the financing institutions are responsible for selecting a “credible” microfinance institution to play the role of issuer. It is then the responsibility of this microfinance, to select for a given sector groups / cooperatives that have demonstrated good operational and financial governance, because it is the latter who proceed to the designation, within their members, of the borrowers (designated beneficiaries).
The FinAfrique firm also indicates that this project has gathered around it a working Group in which international institutions such as the United Nations Development Program (Undp) which also provides financial support to this initiative, the Economic Commission for Africa (ECA), Cooperation Fund (Fagace), the African Solidarity Fund, the Regional Securities Exchange (Brvm), the Central African Securities Exchange (Bvmac) among others, as well as public administrations such as the Ministry of Trade and the Ministry of Finance (Minfi) for Cameroon.
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