Nigerian investment firm Cascador and lender Sterling Bank launched a $200 million fund for small and medium enterprises, in a bid to close a credit access gap that constrains the growth potential of a vital pillar of African commerce.
More than 90% of African businesses are categorized as SMEs, accounting for more than half of GDP in most countries and the majority of employment. But a $331 billion SME financing gap means that, despite being the backbone of the continent’s economies, many African entrepreneurs lack capital to invest in production and generate growth revenue.
Cascador recently published a paper that found only 22% of sub-Saharan Africa businesses hold a bank loan or line of credit, compared with 36% globally. The firm’s new facility with Sterling Bank will offer loans of up to $1 million per business in an attempt to help the enterprises secure larger and longer-tenor capital.