BOOSTING SME GROWTH IN AFRICA

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BOOSTING SME GROWTH Creating jobs and economic opportunities in Africa

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Contents

1. Why SMEs?

2. Africa: A continent of opportunities for

SMEs

3. Challenge before SMEs

4. Economic brief - An African

perspective

5. Growing well capitalised & skilled SME

sector

6. Supporting SMEs to create value &

business opportunities

7. Business transformation & project

management solutions

8. Solutions to support SMEs unlock new

consumers & markets in Africa

9. Upcoming events

10. SME growth solutions

11. Get in touch

Why SMEs?

High-growth enterprises play a vital role in

creating jobs and driving economic growth in

Africa through entrepreneurship, innovation

and market expansion.

However, many SMEs struggle to access

capital and the support needed to overcome

the many challenges they face as they take

their businesses, consumers and markets to

the next level.

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Africa: A continent of opportunities for SMEs. The continent of Africa has for too long been considered a place where business could neither earn a satisfactory rate of return against the perceived risks or assist in meaningful ways the individual economies to develop. There were always exceptions but for the majority of countries the risks were simply seen as too high. Whatever the intentions of socially aware Executives, the complications and lack of conventional facilities meant that their investments remained mainly in the Euro zone, Eastern Europe, the US and its close neighbours and of course the BRIC countries. But in recent years investors have been arriving in capital cities across Africa looking for investment opportunities. The flat-lining of many developed economies has made sub-Saharan Africa an attractive destination for money and its managers. Foreign direct investment has increased by about 50% since 2005 and this figure is continuing to rise. Africa's macroeconomic prospects remain favourable. In 2013, Africa maintained an average growth rate of about 4% and in many countries this will continue to rise. However, this much needed increase in investment flows is failing to translate into job creation and the broad-based development needed to reduce high poverty and rising inequality rates in many countries. – For those working in the formal sector of the continent's economies their needs are injections of new and innovative ways of expanding the small and medium sized business sector – it is this sector that will drive meaningful and long-term development. West Africa should continue to enjoy the strongest growth on the continent, with an anticipated increase from 6.7% in 2013 to 6.9% this year. The region will continue to attract investment in oil and minerals, especially in Burkino Fasso, Ghana, Guinea, Liberia, Niger Nigeria and Sierra Leone- though concern of the affect of health and safety may cause economic disruption in some of these countries. East Africa is also expected to experience robust growth, increasing from 6% last year to 6.4% in 2014. Growth will benefit from increased consumer spending in Kenya and Rwanda, higher consumption and investment in natural gas in Tanzania, a rise in activity in construction, transport, telecommunications, as well as exploration and construction in the burgeoning oil industry in Uganda. But much of this is based on the resource sector – slow to 'trickle down' to the 'real' economy and often criticised for repatriating profits and creating little small business generation.

Dr John Birchall, A development Economist, affiliate and hon. Lecturer at The University of Cambridge, Centre for African Studies (SOAS), the Universities of Sierra Leone, Zambia and Harare, Solusi and Zimbabwe.

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Our solutions create jobs, boost local economies and generate income for businesses.

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Challenge before SMEs

Africa's recent growth has been driven by commodity production and exports, but remains far below the continent's potential. Meaningful job creation is weak and growth is not tackling high poverty and rising inequality in many countries. Overseas and domestic businesses need to develop ways of:

Releasing skills potential, especially amongst women

Using IT to offer creditable and worthwhile education schemes to those who want to learn – across countries and not just in major population centres

Working with local business to improve efficiencies, techniques etc.

Building awareness and confidence amongst employees, especially younger members of the workforce

Raising capital at acceptable and affordable rates and making this accessible

Reliable ways of collecting and using data to improve decision-making

Growing more food, with new and less fertiliser-based methods, so raising the profile of farming and slowing the continued rural-urban drift of many young people

Maintaining and distributing clean water supplies, easier access to sustainable energy sources

Developing online banking and financial services The UN attributes weak job creation to a heavy dependence on minerals and agriculture, but says growth in other sectors such as telecommunications, financial services, transport and construction have the correct framework in place to encourage investment and improve the profitability of incoming and domestic businesses.

.

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SMEs and Entrepreneurship:

Key engines of economic growth

and prosperity

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Economic brief - An African perspective A brief analysis of the 'numbers' show: That cost of starting a business have fallen by more than two-thirds over the past seven years, while delays for starting a business have been halved. The continent's middle class is growing rapidly - around 350 million Africans now earn between $2 and $20 a day. The share of the population living below the poverty line in Africa has fallen from 51% in 2005 to 39% in 2012. Africa's collective gross domestic product (GDP) per capita reached $953 in 2013, while the number of middle income countries on the continent rose to 26, out of a total of 54. Moving products and people remains a major problem - Africa currently invests just 4% of its collective GDP in infrastructure, compared with China's 14% - new and cost effective ways of moving goods and people is another area waiting for innovation and investment based on SME's. Africa’s rising growth is underpinned by strong private investment. Gross fixed capital formation in the region has steadily increased from about 16.4% of GDP in 2000 to about 20.4% in 2011 – but this tends to be dominated by large resource and infrastructure – helpful at the macro level but only slightly felt at the micro level of the economies. Once again, it will be SME's who will drive innovation in these crucial sectors of the economies. But as Africa’s growth rates continue to surge with the region increasingly a magnet for investment and tourism poverty and inequality remain high and the pace of reduction slow. Africa grew faster in the last decade than most other regions, but the impact on poverty is much less than we would’ve liked. Africa’s growth has not been as powerful in reducing poverty as it could have been because of the high levels of inequality. Growth with equity is possible, but it requires a decline in inequality in both outcomes and opportunities. Almost one out of every two Africans lives in extreme poverty today. Optimistically, that rate will fall to between 16% and 30% by 2030 – but on current levels of economic and population growth most of the world’s poor people by 2030 will live in Africa. Exports from Sub-Saharan Africa have remained concentrated in a few commodities such as oil, metals and minerals. Throughout the region, countries have diversified their trading partners and the BRIC countries—China, Brazil, Russia and India— now account for 36% of the region’s exports. These exports reached US$144 billion in 2012, almost at the same level of Africa’s exports to the EU and the United States combined at US$148 billion.

Dr John Birchall, A development Economist, affiliate and hon. Lecturer at The University of Cambridge, Centre for African Studies (SOAS), the Universities of Sierra Leone, Zambia and Harare, Solusi and Zimbabwe.

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SSCG provides focused managerial perspectives and analytics to help our clients understand their markets and consumers in order to enhance decision making, profitability and growth.

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Growing well capitalised & skilled SME

sector

The informal sector is the largest part of any developing country and opportunities remain limited for those seeking to enter the labour market, as seen by high youth unemployment rates and wide gender disparities in earnings. Continual pressure on labour markets for a steady stream of new entrants due to population growth has meant that even solid GDP growth rates have not been sufficient to make measurable impacts on poverty and inequality – training this sector, showing them new skills is another major sector for SME involvement.

Some African countries are raising much needed capital on the international bond markets, whilst others have seen net inward investment climb. These new flows of capital will assist with infrastructure and other large projects and they will provide the environment for small and medium sized enterprises to offer opportunities and vision of new and innovative ways of helping Africa to build to be a more inclusive and sustainable development.

Boosting SME support services and skills Providing effective small business support is a keystone of our effort and which require new ways of working together across public and private sectors and openness to innovative ideas and models. Crucially, in supporting small businesses we should not start from a blank slate but should tap into and where necessary catalyse and link together the local value chains, assets, infrastructures and networks that are already serving small businesses.

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Delivering to our clients in the right way.

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Supporting SMEs to create value &

business opportunities

Stimulating market development, economic

prosperity and inclusive growth.

The continuing success of Foreign Direct Investments (FDIs) and flow of remittances into emerging and developing economies reflects the on-going growth of the markets and investors’ appetite.

We understand that good investment requires deep knowledge and insights of market characteristics. Through our business network and extensive experience developed over the years, we can provide you with the best possible options and support you to understand these markets comprehensively.

SSCG work to facilitate and revolutionise the way businesses and investors invest in developing markets. We can help you to maximise profit and returns. We offer networking opportunities, support and independent advice to companies, investors and Diaspora seeking to invest or expand in the African markets.

We provide independent advice on how best to identify investment opportunities, allocate financial assets across all asset classes. We can help you identify high growth and returns projects and sectors for investment; and access top performing asset managers in each asset class.

Our extensive network of experienced sector and location professionals will provide you with market information, location guidance and practical help to get your business operation up and running in new markets. Further support you to enhance your operation capabilities, grow and access export markets from your base. Our investment advisory service is independent, highly professional and aligned to current market and client’s needs.

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Business transformation & project

management solutions

Optimising your business for efficiency. SSCG’s operation and business continuity solutions are designed to provide our clients with world-class innovative, entrepreneurial support and development experiences. We place great emphasis on ensuring that clients are given a superior support and solutions to be fully integrated in their personal, business and professional activities. We support our clients to re-engineer their Target Operation Models (TOM) and deploy leading practices to increase productivity and returns. Through our tailored, high-impact enterprise management solutions and consultancy services, individuals and organisations are transformed into top performers at the cutting edge. Our one-stop customised innovative and enterprising solutions are designed to ensure that our clients are transformed and supported to impact their business performance.

Managing your capital projects We help our clients throughout their projects life-cycle, from developing top notch project concepts and high standards business plans, allocating resources efficiently and executing plans effectively to increase results. Our ability to challenge assumptions and manage projects effectively continues to win us clients after clients, from multinational blue chips to public sector organisations. We believe that the next generation of project management calls for a genuine partnership between providers and clients through a 4Ps Model (Public, Private and People Partnership) which addresses efficiency, inclusiveness and effectiveness. A partnership that focuses not just on the acquisition of talent but on its planning, engagement, development and retention. In addition, offers measurable increases in productivity, clarity and project performance. We have experience working in this area of business; have developed extensive expertise working with clients time after time.

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Solutions to support SMEs unlock new

consumers & markets in Africa

Consumer demands and specifications are shifting along with the middle class in developing markets, as is the competition and business climate. These factors make it critical to be specific when it comes to operating in these markets, from developing the right products and services, delivery and post-sales support. At SSCG, we believe that understanding market opportunities, constraints and innovation play an important role in establishing your business operation strategies and allocation of re-sources.

The pressure to crack open markets in developing countries, particularly those at the middle and bottom of the pyramid, is driving a surge in business-model innovation. The economic slowdown in developed markets is forcing companies to reshape their operation models. In addition, the rise of new technology-based and low-cost rivals is threatening incumbents, reshaping industries, and redistributing profits. Indeed, the ways by which businesses create and capture value is undergoing radical transformation worldwide. At SSCG, we draw upon our global and local knowledge, market and industry insights to help our clients enhance their operation capabilities, unlock new consumers and market opportunities across multiple sectors and economies in Africa. We are highly integrated across the region, which is very significant for our clients and to ensure that we retain consistent and quality standards everywhere.

At SSCG, we support our clients to do business in Africa, navigate market challenges, de-risk operations and strengthen value chains to increase returns.

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Our experience and hands-on approach maximises returns and ensures projects are timely, on budget and to the required standards.

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Upcoming Events

Africa SME Trade & Investment Conference

19 February 2015, London | 20 - 21 May 2015, Brussels

Africa International Conference on Business Transformation, Growth & Investment

04 – 05 March 2015, Abuja | 14 – 15 October 2015, London

Kenya Enterprise Growth & Investment Conference

25 – 26 March 2015, Nairobi

Africa SME Conference & Exhibition

15 - 16 April 2015, London

Africa Small & Medium Business (SMB) Conference

30 April 2015, London | 15-16 July 2015, Lusaka | 22 – 23 September 2015, Abuja

SSCG Economic & Entrepreneurship Conference

06 - 07 May, Abuja |15 -16 September, Nairobi | 09 - 10 December 2015, Lusaka

SSCG Africa Economic & Entrepreneurship Conference

10 - 11 June 2015, Oxford

Technology, Media and Telecoms (TMT) Conference on Africa

19 – 20 August 2015, Lagos

SSCG Annual Southern Africa Trade and Investment Conference

09 – 10 September 2015, Lusaka

Africa Infrastructure, Facilities & Real Estate Conference

21 – 22 October 2015, Abuja

African Investment & Financial Sector Conference

02 – 03 December 2015, Nairobi, Kenya

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SME growth solutions

How we can help you enhance your business competitiveness and growth in Africa. To help SMEs seize new opportunities and growth, our professionals provides management solutions on key business lines and industry issues, including:

Projects and portfolio management

Operation, risks and business continuity

Strategic planning and execution

Market development and growth

Process optimisation and improvement

Economic and investment

Technology upgrade and systems improvement

HR function improvement, talent development and management

Consumer service delivery and transformation

Financial management

Business development and optimisation Product development and innovation

Get in touch

For more information or to discuss your tailored business needs, contact us at: T: + (44) 1865 600580 or + (44) 1865 600576 E: [email protected] or [email protected] W: www.s-scg.com SSCG Corporate Services: A UK entity and a subsidiary of Sub-Saharan Consulting Group (SSCG). Registered in England by The Registrar of Companies for England and Wales. Companies House Number: 09117867. Office: Clarendon Enterprise Centre, Clarendon House, 52 Cornmarket Street, Oxford, OX1 3HJ Tel: +44 (01865) 600576 | Email: [email protected] | Web: www.s-scg.com