Making Finance Work for Africa - Part II

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The following item is the conclusion of an earlier post discussing the goings-on at the Partnership Forum on Making Finance Work for Africa, held in Ghana on the 17th and 18th of June.

Susie’s got a client to find, and I continue the rounds. I’m approaching a flamboyant, curly-haired Irishman whom I met earlier in the day, when he urgently needed a room to deliver a presentation he’d only just decided to make. Garrett Wyse, from Microventure Support, based in Washington, D.C. “How did it go? I heard you were the most captivating discussion this afternoon!” That’s surely a good conversation-starter. “Really, well I’m flattered…” He’s stumbling, I press on. “You were right to point to a gap in the market we’ve been talking about—we’re a gathering of regulators and bankers who think about the big-picture in finance, and most of the enterprises in Africa are small- and medium-sized.” He’s nodding. “What did you say about the hurdle in borrowing?”

Garrett glows—this is something close to his heart, I can tell, as if I’m asking about his kid’s first bike-ride. “It’s about the range from USD10,000 to 50,000. These small and medium-sized ventures are only getting loans of a few hundred dollars, and they’re strapped by the monthly payments.” (That reminds me of a conversation I had the night before with a World Bank insurance guru—farmers don’t have many options when it comes to finance, and loans requiring equal monthly payments don’t make any sense when the harvest only comes in once at the end of the year). Garrett is going on, “but there’s such a great opportunity out there, if these businesses could just get their hands on a few thousand in loans or equity. There’s this producer of dried fruits in Uganda, and I saw his product on a grocery store shelf in Ireland. I traced back along every step of the value-chain and found I could lend to these guys, and help them add value every step of the way.”

He is gushing; I need concrete answers. “So what are the maturities on your loans?” “Two years.” Well that’s not so revolutionary—we were just complaining in the plenary about the inadequacies of year-long loans. “And do you take equity stakes?” “We’re completely open-minded—we’re going to do whatever makes the best sense.” Wait a second, was that the future tense? “Are there any firms in which you have an equity stake now?” I have to ask. “Not presently.” “And how many loans do you have outstanding?” A pause. “None. We just started this project a few weeks ago, and I literally just got the presentation a few hours ago.” Gosh. I give him an optimistic smile. I’m reminded of World Bank sector weeks, where every project is interesting, even the ones that began yesterday.

He’s beaming and wiping his forehead, and I’m looking around the foyer. So who is filling the gap between ten thousand and fifty thousand? The crowd is thinning.

If I had only sat in the plenary sessions, I would have a laundry-list of regulatory, legal, and infrastructure challenges facing Africa. I would be picking up my things and heading for an early flight, thinking about policy initiatives going forward. But I’m sticking around, and the conversation is getting livelier. It seems that the quirkiest, the potentially least successful ventures, and the potentially biggest big-bang ideas, are shared over coffee and cocktails. People gather close, take a nip of courage, and talk about the next big thing—Wiki-policymaking, handheld risk management, and rural-made financial products. Does that really work? Are you crazy? Here the comments are immediate and uncensored—but also friendly.

The real test will come next year, and the year after that. If we find ourselves gathering again next to the coffee pot, I’ll be interested to hear the ideas that dive-bombed and those that have been a tremendous success.

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