Promoting SMEs/SMIs is one of the key factors for dynamic economic growth in the Union. BOAD’s contribution to promoting and financing SMEs/SMIs has materialized into promoting financing vehicles and funding through banks and financial institutions as well as direct loans to projects and financing of studies.
BUSINESS OVERVIEW
Promoting financing vehicules
To provide for the needs of SMEs that are customarily facing difficulty in mobilizing adequate equity and guarantees to make their projects bankable, BOAD has, in conjunction with several partners like Agence Française de Dévelopment (AFD), German Development Agency (DEG), European Investment Bank (EIB) and African Development Bank (AfDB), contributed to setting up specific vehicles including GARI Fund (providing guarantee for private investments in West Africa) and CAURIS Investissement, a venture capital company.
Cooperation with national financial institutions
BOAD maintains cooperation with national financial institutions (NFIs) as a preferred course for supporting SMEs-SMIs. Through refinancing facilities extended to NFIs and SME-SMI promotion boards, such cooperation complements direct loans to the private sector. Thus, BOAD provides to national financial institutions (NFIs) its technical and/or financial support.
To support those SMEs, BOAD usually provides lines of credit for refinancing productive investment projects. In this connection, many refinancing facilities are being provided for specific needs: lines of credit, refinancing framework agreements, leasing and specialized comprehensive packages.
Direct loans to SMEs
In addition to loans provided through banks and financial institutions, BOAD directly contributes to financing a number of SMEs with high potential and adequate organization that can ensure long-term existence of the business.
Since the commencement of its operations, BOAD has always placed a special emphasis on promoting SMEs which make up the bulk of businesses in the WAEMU region, convinced that this cluster is crucial for wealth creation within the Union.
This vision is strengthened by a study sponsored and financed by BOAD, which led in December 2003 to the adoption by the Council of Ministers of the regional programme of action for SME promotion and financing in the WAEMU region.
Financing of studies
Where a project proponent has no feasibility study on his project, he may request the Bank’s financial support in the form of cash advance. In addition to the formal application, the request for funding a study should include:
- the opportunity assessment study providing a clear focus on the project (definition, market, size, location, cost, technical partner, when appropriate, etc.;
- the detailed terms of reference for the feasibility study to be conducted;
- the composition of the team of experts to conduct the study and the confidential estimate of the study cost broken down into fees, living expenses, travel cost and other stipends;
- the shortlist of consultants;
- the articles of incorporation of the management company, as appropriate;
- the collaterals provided;
- any other document or information deemed useful for assessing the project.
The cash advance is refundable should the study results in a viable project implemented with or without the financial support of BOAD.
THE WAY FORWARD AND/OR CHALLENGES
In an environment marked by poverty, and facing a challenge of achieving significant growth for substantial impact on poverty reduction, BOAD will continue, over the coming years, to intensify its activities in favour of the private sector by providing adequate support to SME development in the WAEMU region. This will clearly consist of financing further the development of SME/SMI segment through increased lines of credit and suitable managerial support. As a priority, managerial support will be envisaged in conjunction with innovative assistance programmes that could provide sustainable solutions to the structural issue of managerial capacity building for SMEs/SMIs.