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Bank financing of SMEs in five Sub-Saharan African countries : the role of competition, innovation, and the government

Author

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  • Berg, Gunhild
  • Fuchs, Michael

Abstract

This paper provides an overview of the state of access to bank financing for SMEs in five Sub-Saharan African countries and analyzes the drivers behind banks'involvement with SMEs. The paper builds on data collected through five in-depth studies in Kenya, Nigeria, Rwanda, South Africa, and Tanzania between 2010 and 2012. The paper shows that the share of SME lending in the overall loan portfolios of banks varies between 5 and 20 percent. Reasons for this finding vary, but key contributing factors are the structure and size of the economy and the extent of Government borrowing, the degree of innovation mainly as introduced by foreign entrants to financial sectors, and the state of the financial sector infrastructure and enabling environment.

Suggested Citation

  • Berg, Gunhild & Fuchs, Michael, 2013. "Bank financing of SMEs in five Sub-Saharan African countries : the role of competition, innovation, and the government," Policy Research Working Paper Series 6563, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6563
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    References listed on IDEAS

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    2. Michael Fuchs & Leonardo Iacovone & Thomas Jaeggi & Mark Napier & Roland Pearson & Giulia Pellegrini & Carolina Villegas Sanchez, 2011. "Financing Small and Medium Enterprises in the Republic of South Africa," World Bank Other Operational Studies 12687, The World Bank.
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    Citations

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    Cited by:

    1. Ephraim Ugwu & Johnson Okoh & Stella Mbah, 2017. "The Link Between Bank Credit And Private Sector Investment In Nigeria From 1980-2014," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 2(1), pages 43-54, March.
    2. repec:spr:jglont:v:7:y:2017:i:1:d:10.1186_s40497-017-0074-2 is not listed on IDEAS
    3. Hatice Jenkins & Monir Hussain, 2014. "An Analysis of the Macroeconomic Conditions Required for SME Lending: The Case of Turkey," Development Discussion Papers 2014-06, JDI Executive Programs.
    4. Lokman, Azarahiah & Masih, Mansur, 2016. "What drives banks’ willingness to lend to SMEs? An ARDL approach," MPRA Paper 72113, University Library of Munich, Germany.
    5. Beck, Thorsten & Cull, Robert, 2014. "SME finance in Africa," Policy Research Working Paper Series 7018, The World Bank.

    More about this item

    Keywords

    Access to Finance; Banks&Banking Reform; Debt Markets; Financial Intermediation; Environmental Economics&Policies;

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