AfCTA: experts call for affordable credit to SMEs in manufacturing


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Small and Medium Enterprises (SMEs) in manufacturing sector could be the biggest drivers of the African Continental Free Trade Area (AfCFTA) with availability of affordable loans in post-covid era according to industry experts.

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Speaking during a virtual session organized by the Kenya Association of Manufacturers (KAM), industry experts urged states and financial services providers to collaborate in order to de-risk lending to SMEs.

“SMEs continue to face barriers which hinder them from accessing both local and international markets. For instance, financial institutions consider them as high-risk borrowers, hence are reluctant to lend to them. Lending to SMEs shall enhance their competitiveness, thus creating a level-playing field between them and products manufactured in other markets,” said Joyce Njogu, KAM Head of Consulting.

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AfCFTA came into force on 1st January 2021 amid the COVID-19 pandemic which hurt production and demand with small businesses being the worst affected in terms of cashflow.

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However, with easing of some of the health measures, the Central Bank of Kenya (CBK) last month noted a 15.8% growth in credit to the manufacturing sector in 12 months to February signaling a recovery.

“With the commencement of trade under AfCFTA, came challenges, which hinder small businesses across Africa, from reaping its benefits. We, therefore, need to create our own solutions, to finance businesses to take advantage of opportunities presented by different trade agreements,” said Emeka Uzomba, Senior Advisor Africa Export – Import Bank.

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Speaking during the event, Director for Chemicals and Minerals, Ministry of Industrialization, Trade and Enterprise Development, Julius K. Kirima noted that for SMEs to trade across the continent, they must adhere to policies and regulations put in place, saying, “Government’s policies and regulations seek to ensure that all products and services adhere to the highest standards, for them to gain access to other countries.”

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Syspro Africa Head of Solutions, Dierdre Fryer explained that the coming into force of AfCFTA is disruptive and calls on businesses to adjust their operations.

“Technology and development under multilateral trade are inseparable. Harnessing technology, by both the business community and participating governments, shall enable the swift movement of goods, services, money and even skills in Africa. Automation of systems also has the potential to significantly reduce costs,” observed Fryer.

Poor transport linkages, irregular customs regime and overlapping membership to trade blocs have been cited as some of the challenges facing full implementation of AfCFTA.

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