ADDIS ABABA – African Union has launched a new Continental Smart Finance and Digital Banking Initiative for Micro, Small and Medium Enterprises (MSMEs) which constitute over 90% of total business units in Africa.
The AU says the initiative would support the African SMEs, women and youth to realize financial self-sustainability, build market and investor confidence, and ultimately accelerate Africa’s economic growth.
The initiative was launched by the AU Commission Department of Economic Development, Trade, Industry and Mining in collaboration with the AeTrade Group on the margins of the African Union Summit in Addis Ababa.
“For Africa to become a meaningful and proportionate shareholder of the global digital economy, it needs to leverage on data and commercial intelligence to benefit the masses of MSMEs, young startups, youth and women,” the pan african bloc said.
To facilitate this, the AU said it has launched the African Smart Finance and Digital Banking Initiative, which will deliver loans to millions in different countries at low interest, accelerated cycle of service delivery.
Apart from reducing risk related to affordability of the cost of finance, the initiative aims to bring down the loan cycle from three-month to three-day.
AU Trade Commissioner Muchanga said the advent of COVID-19 the past two years have demonstrated “without doubt that SMEs are the backbone of our economies”.
“However, due to various constraints we were unable to provide them the stimulus packages that developed countries are able to give,” he said.
The launch of the African Smart Finance and Digital Banking Initiative “should be considered an integral part of the strategy for building back better as a continent,” he said.
The initiative will work closely with public and private sector partners including Development Finance Institutions in Africa, implementing AeTrade interoperable payment system and smart financing in support of MSMEs, women and youth.
“We have been studying the African economy and some of the root causes for the insufficient job creation capacity across the continent for the past fifteen years,” said Mulualem Syoum, Founder and CEO of the AeTrade Group
AeTrade sees three chronic areas to be addressed – capacity building for MSMEs, access to affordable finance as well as to digital and other infrastructure to facilitate cross border trade, according to its CEO.
“Today we are focused on addressing the challenges that leave MSMEs marginalized from the financing system despite significant efforts that have been made by African Governments and various stakeholders including the international community.” he stated.
The AeTrade Group countersigned the Host Country Agreement with the Government of Rwanda.