C4C Event: Non-conventional access to finance and capacity development in Africa

Access to finance and capacity development are of crucial importance in the context of socio-economic development and local job creation in Africa. With this event, the GIZ Representation in Brussels, together with its partner organisations, ADAN, ADEPT and the GIZ project WIDU.africa, hosted an exchange about the importance of hybrid financial instruments and capacity development to reach the bottom of the pyramid in Africa. Andrea von Rauch (Director GIZ Representation in Brussels) opened the event by highlighting the innovative potential for access to finance and coaching measures for the development prospects of small entrepreneurs in Africa.

Keynote speaker Günter Nooke (Personal Representative of the German Chancellor for Africa) stressed the importance of focusing on diaspora contributions for development on the African continent and the significance of strengthening synergies between European and German approaches to this topic. The diaspora society plays a vital role because of its knowledge about the circumstances in its home countries and respective economies. Mr. Nooke further emphasized the potential of hybrid financial instruments like WIDU, as they offer both financial support and coaching carried out by local experts. According to Mr. Nooke, WIDU’s approach of small ticket funding is pivotal for African informal sector development, which cannot be catered by the large development programs of Germany.

Allie Bangura (Founder and Board Member ADAN) presented capacity building and access to finance as the two most pressing topics concerning the socio-economic development of the African continent and emphasized the key role of the diaspora in this context. The skills transfer of the diaspora can lead to capacity building in African countries. Secondly, concerning the access to finance, Mr. Bangura pointed to the potential that upscaling platforms like WIDU has to help provide capital for small and micro entrepreneurs. Finally, Mr. Bangura mentioned how WIDU’s mechanism of blended finance makes investments of the diaspora less risky and more transparent.

Carine Nsoudou (Director ADEPT) emphasized that mobilizing financial resources continues to be a major obstacle for diaspora organizations to get engaged in Africa. Mrs. Nsoudou accentuated that the WIDU platform makes capacity development activities easier accessible and that small amounts of money lead to multiplier effects. According to her, it is crucial to further develop innovative capacity-development programs, to make it easier for diaspora organizations to engage with local entrepreneurs.

Wolfram Zunzer (Programme Director GIZ) explained that WIDU set out to create a digital platform which enables a targeted support of small businesses in Africa with direct funding and tailored coaching. The idea of WIDU is to tap into the already existing vast amount of remittances sent to Africa, which exceeds ODA flowing into the continent. Therefore, public and private funding is combined to help create jobs in the bottom of the pyramid in Africa. Mr. Zunzer underlined the high demand for WIDU grants and the significant potential for upscaling the program to the European level. He further explained how the platform will become a hybrid, digital instrument between financial cooperation and technical cooperation.

Following these presentations, there was a series of Q&A.

Mr. Zunzer and Mr. Nooke expressed the desire to include further countries in Africa and Europe in the WIDU network. Additionally, data concerning the WIDU program was shared: since the launch in November 2019, over 16,700 sponsors and entrepreneurs have registered, than 2,200 projects are currently being implemented, more than 2.000.000€ of private investments (from diaspora and entrepreneurs) have already been accomplished, an additional 1,750,000€ are currently being leveraged. On top of that, 3.400.000€ of WIDU grants have been disbursed to small and micro entrepreneurs.

The event continued with a panel discussion with representatives of governments, the private sector in Africa and the DG INTPA.

Oliver Boachie (Special Advisor to the Minister of Environment, Science, Technology and Innovation for the Republic of Ghana) described how the Ghanaian government aims to pay closer attention to the uptake of technology, aiming to make innovation and entrepreneurship a driving force of the country’s economy.

Dr. Kwabena Obiri Yeboah (CEO Code of Africa) explained how the vast amount of remittances sent every year is a crucial source of money for African societies. Mr. Yeboah pointed out that digital solutions such as WIDU make the communication between the diaspora and the people in home countries decisively easier, thereby enhancing processes of remittances themselves. Furthermore, Mr. Yeboah pointed out how WIDU is an organisation that tracks the process and provides coaching, thereby ensuring the remittance sender that the money will be put to good use, which encourages an even larger volume of remittances to be sent.

Kennedy Tumenta (Director Africa Bib, Cameroon) indicated that digital solutions could help solving those challenges most prevalent in the informal sector. Using the example of mobile money, Mr. Tumenta highlighted that carefully educating people in the usage of a novel digital solution is crucial for its success, as otherwise there exists a considerable risk of digital separation. He identified WIDU as being crucial for lifting the entrepreneurial spirit and pushing entrepreneurial ventures in the informal sector. Finally, he recognized the WIDU model as a unique solution, enabling African people to support other African people.

Christian Crivari (Policy Officer DG INTPA E, Private Sector and Financial Markets Development) explained that the EU is currently examining options for sustainable and digital financial services aimed at small businesses. By investigating the institutional level of financial inclusion, digital literacy and customer protection in Africa, one important challenge identified is that it is very difficult to design financial products that reach very early stage and pre-seed entrepreneurs in Africa. According to Mr. Crivari, WIDU succeeds in doing so by closely working together with the diaspora, who can identify those entrepreneurs. Mr. Crivari also pointed out how WIDU incorporates the local business ecosystem into a financial product by involving the diaspora in the process. Additionally, he underlined the sustainable nature of diaspora versus ODA direct funding. Crucially, Mr. Crivari voiced an interest in cooperating with WIDU and further bilateral exchanges.

Many thanks to all participants and especially to our speakers. Please do not hesitate to contact giz-brussels@giz.de with questions or feedback.

Capacity4Change (C4C) is an event series in Brussels organised by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in cooperation with selected partner institutions and organisations. C4C aims to enrich the Brussels policy debate with practical know-how and implementation experiences. It features innovative approaches, challenging analyses, interesting publications and thought-provoking ideas.