Recently I met a remarkable entrepreneur in Antanarivo, Madagascar. Maxime, aged 70, worked for many years as a teacher. Twenty-five years ago he started writing text books for schools. Ten years ago he decided to set up a printing and binding operation to publish the books. Today he is the dominant text book author and publisher in the country. Each day he rises at 3am to write another section of a text book.
English was recently added to the existing official languages of Malagasy and French, thus opening up opportunities for more text books. Maxime's business premises consist of his house, with an adjoining building housing the printing and binding machinery. I met Maxime because he has received financing from a fund managed by Business Partners International.
Business Partners, which is South African-based, specializes in providing small businesses like Maxime's with risk capital. They are very good at it - and at reaching large numbers of small companies. Over the past few years BPI has provided thousands of SMEs with equity, quasi-equity and - crucially - hands-on advice.
One of the key products which BPI offers is the so-called "royalty loans" whereby the entrepreneur is provided with a low interest loan, but with a "royalty" payment if it reaches certain targets. This form of risk-sharing is very attractive to small businesses. BPI is one of the few managers in emerging markets to have demonstrated a successful track record in reaching large numbers of SMEs. Last week, G-8 called for turning Africa into a "continent of opportunity" recognizing SMEs' role as drivers of local sustainable economic growth.
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