GroFin, a development financier specializing in support for Small and Medium Enterprises (SME) across Africa and the Middle East, has reiterated its commitment towards making SMEs the main driver of employment generation.
According to Raymond Denteh, one of GriFin’s Senior Investment Managers, the SME sector holds the key to accelerated development and must not be underestimated.
“As many as 70-90% of all SMEs fail in their first three years of existence and their success is dependent on access to finance, business skills and the enabling environment for growth,” he said at a training programme held by GroFin in Accra last week for prospective entrepreneurs.
Mr. Denteh said that initial investment readiness and challenges for smaller SMEs and start-ups are significantly higher than larger SMEs.
He said GroFin, which was established in 2004 with the sole focus on developing and managing SME funds that address the finance and business support needs of entrepreneurs, currently manages 10 SME funds with total capital commitments in excess of $500 million.
He also said GorFin is being supported by more than 30 leading international investors and added that they were assisting committed entrepreneurs to access tailored finance and experienced business support.
According to Mr. Denteh, GroFin’s pre-investment business support of data of over 8,000 entrepreneurs showed that 72% have no formal accounting system, 43% are not compliant with local regulations, 66% lack environmental, safety and governance standards, 57% have no formal business plan, 63% of capital at risk and these are all being recorded in a difficult SME enabling environment.
He said since its inception, GroFin has approved over 750 transactions, sustained 95,125 total number of jobs and 480,000 total family members impacted by investees, as well as sustained 28,500, representing 30% female jobs and added $700 million economic value.
“We ensure that the businesses have a measurable impact and that SMEs that provide indirect job opportunities like training, skills development and/or environmental services such as water, waste, energy, ecotourism are also attractive to GroFin.”
He also added that “GroFin delivers business support to clients prior to the investment and during investment period – focusing on improving business viability, sustainability and growth,” adding that “for this reason, entrepreneurs need to be receptive to receiving advice and implementing recommendations, normally around improving formalisation of their business.”
By William Yaw Owusu