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MITIGATING RISKS FOR AFRICA'S GROWTH BUSINESSES (SMEs)
Written by: African Development BankArticle Overview: PRESENTATION AT THE JAI/ADB 2ND ND AWIB TRAINING WORKSHOP SEPTEMBER 19-23, TUNIS, TUNISIA BY PETER KIBIRITI, CEO, CORPORATE AFRICA LTD CEO,NAIROBI, KENYA AUGUST 2005
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Free Download - References: Human Capital and Economic Development By African Development Bank |
MITIGATING RISKS FOR AFRICA'S GROWTH BUSINESSES (SMEs)
SME RISKS SME RISKS
The Context The Context
REAL AND IMAGINARY REAL AND IMAGINARY
IMAGINARY RISKS (RED)IMAGINARY RISKS (RED)
•High birth/death rate (Survival)
•Inadequate experience
•Narrow market
•Short-term goals (“lifestylistic”)
•Unclear growth/critical path
•Dominant player
•Weak or non-existent structures
•Informationallyopaque
•No succession planning
REAL RISKS REAL RISKS
•POLITICAL
•COMMERCIAL/CREDIT
POLITICAL RISK
•Cancellation of Licences and Restrictions on Import and Export
•Inconvertibility and Inability to Transfer
•Imposition or Increase of Import or Export Taxes
•Selective and Discriminatory Imposition or Increase of Import/Export Taxes, Levies or Duties
•Expropriation
•Government Interference with entities owing insured obligations
•Seizure of Goods, Prevention of Sale, or Prevention of Export
•Interference with the Carriage of Goods
•War or Civil Disturbance
•Embargo
•Diversion Risk
CREDIT RISK CREDIT RISK
•Arises from
–the insolvency of buyers in trade transactions
or
–Past due default on the part of customers
POLITICAL RISK INSURANCE POLITICAL RISK INSURANCE
1.WHO OFFERS IT?
2.TERMS AND CONDITIONS
3.APPLICATION PROCESS
4.CLAIMS PROCESS
MITIGATING CREDIT RISK MITIGATING CREDIT RISK
��CREDIT RISK INSURANCE
1.WHAT IT IS NOT
2.BASIC PRINCIPLES
3.WHO OFFERS IT
4.BENEFITS TO INSURED
I. Catastrophic loss protection
I.Safe sales expansion
II.Credit decision support
III.Borrowing enhancement
4.THE UNDERWRITER’S ROLE
1.Policy premium
2.Risk retention
3.Coverage limit
5.THE APPLICATION PROCESS
MITIGATING THE RED RISKS MITIGATING THE RED RISKS
(THE HIDDEN KEY TO SME GROWTH) (THE HIDDEN KEY TO SME GROWTH)
What can business and governments do to promote SMEs?
SMEs - are African governments doing it right
Restricted Access to Finance
Improving business conditions - Increasing SME Access to Finance: A Four Pronged Approach
SMEs - SMEs and labour rigidity
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About the Author: African Development Bank RSS for African's articles - Visit African's website  Click here to visit African's website   Export Subsidies by Developed Countries Barriers to African External Trade Concluding Remarks Factors Impeding the Poverty Reduction Capacity of Microcredit Some Field Observations from Malawi and Ethiopia Abstract Factors Impeding the Poverty Reduction Capacity of Microcredit Some Field Observations from Malawi and Ethiopia Poverty and Human Resources Barriers to African External Trade |
Related Forum Posts
Re: In-House or Outsource?
- Unfortunately, in the South African context, very few SMEs see outsourcing as an option. They believe it is too expensive, and they are paranoid that someone will "steal their ideas".
I believe that the three main functions that cannot be outsourced are marketing, sales and strategy. These must be done in house I believe. If you do not have the marketing skills then get them. Hire a consultant or attend a course, but get the skills. Even if you use a consultant, you need to understand what marketing is about, as no one knows your market like you do. Marketing is made to seem difficult and complex, but everyone who really understands their markets, can easily learn to do their own marketing.
In South Africa, labour legislation is extremely inflexibile, and consequently labour broking is a large industry. This is an ideal starting point for SMEs in South Africa, as it is a legally complex area, whih comes with severe penalties.
I say do it!
Rob Smorfitt
Re: Women and Financing - It's Difficult!
- I found this paragraph of interest (in the article from Nana's link:
[quote="Nana":3r7womqv]Other studies show that women operate more service and retail establishments than men, which might explain their difficulty in getting financing since financial institutions often consider these two sectors more risky. However, although women are generally less inclined than men to apply for financing, when they do, they are more likely to get it. According to a study by Industry Canada on SME financing in Canada, in 2000 majority female-owned SMEs obtained a loan approval rate of 82%, which is slightly higher than the approval rate for majority male-owned businesses (80%). This suggests that when they do apply for financing, businesswomen submit excellent applications. [/quote:3r7womqv]
They say, "Women are more likely to get [financing]."
But the difference is only 2 percentage points! Big deal! And, that was only for one year, 2000. I'd like to know what the 10-year average is.
Numbers can be manipulated to mean anything you want them to mean...it all depends on what you want to show.
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