"> #COVID-19: Sustainance of #SMEs Key to Mitigating Job Losses- #Norfund - Sahel Standard
December 7, 2021
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#COVID-19: Sustainance of #SMEs Key to Mitigating Job Losses- #Norfund

Governments across Africa must devise smart and effective strategies to inject cash into the SMEs to mitigate impending job losses due to Covid-19 pandemic.

This was one of the conclusions reached at a webinar themed “Bring Jobs Back to Africa” organised by Norfund, the Norwegian development and investment agency.

Those who speak at the virtual event include Chief Commentator Martin Wolf from the Financial Times, DFCU Bank CEO Mathias Katambe and Norfund CEO Tellef Thorleifsson. 

Other key conclusions of the webinar are as follows :

·         The economic growth in SSA is estimated to be negative ( -2,8 %) in 2020 and slightly positive (3.1 %) in 2021 (World Bank). Given the rapid population growth in Sub Saharan Africa, this means a large decline in real income per capita, that may not get back to 2019 levels for several years. As a result, millions of people are likely to be pushed into extreme poverty.

·         The support that is given so far is inadequate. When private investors are fleeing, the public sector needs to intervene with direct and indirect funding.

SMEs account for 90% of the business sector in Africa. Most SMEs are in the informal sector, which means they can be hard to reach.

Many companies have responded to the crisis by being innovative – managing to shift to products that are required and possible to sell in this special situation and increased their focus on reduction of costs.

However, the companies need cash to be able to keep jobs during the crisis and to invest in measures to adapt to the current situation.

African banks have an important role to play and have already made several initiatives to ease the access of SMEs to loans and to delay repayment schedules.

·       But banks lack liquidity too. Increased access to liquidity – at the right price – will allow African banks to bring down costs of lending and to support a larger number of SMEs.

DFIs have an important role in releasing liquidity to African banks, so that the banks can support the SMEs.

Norfund is the Norwegian Investment Fund for developing countries. Its mission is to create jobs and to improve lives by investing in businesses that drive sustainable development.

Norfund is owned and funded by the Norwegian Government and is the Government´s most important tool for strengthening the private sector in developing countries, and for reducing poverty.

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