JETRO

africapractice
Access to Finance: Profiles of African SMEs
An africapractice report prepared for

Contents
Introduction 2
Premise of the report 2

Definition of SMEs 2
Report Format and Methodology 2
Executive Summary 4
Case Studies and Presentation of Data 6
North Africa 6
West Africa 12
East Africa 20
Southern Africa 28
Appendix A 36
Glossary of terms and abbreviations 36

Currency exchange rates 36
Appendix B 37
Questionnaire 37
1
Premise
africapractice was commissioned by the Japanese External Trade Organisation (JETRO) to

conduct a study into access to finance for small and medium sized enterprises (SMEs) in Africa.
The study interrogated the levels of start-up and additional finance both applied for and secured,
and examined the regulatory framework underpinning small business operations in Africa.
Analysing different models of financing informed the demonstration of how access to finance
has helped or hindered the growth of African SMEs.
The study is formed of a compendium of practical examples of SME development, to

complement a body of work informing the Japanese government’s decision-making process
when allocating the Enhanced Private Sector Assistance Programme fund and other aspects of
Japanese technical and financial support.
Definition of SMEs
No universal definition of SMEs currently exists. By its very nature the sector is diverse and
flexible, resisting any narrow categorisation. Regardless of the formal status of the business,
several independent criteria govern whether it is classed as an SME: of primary importance are
turnover and number of employees. For the purposes of the study, the following definition of
SMEs (accepted by the United Nations, World Bank and European Union), which uses the
number of employees as the main criterion, has been adopted:
Criteria Micro-enterprise Small-sized Enterprise Medium-sized Enterprise
Max number of employees <10 <50 <250
Generally, it is understood that, in addition, the business must be independent, which means less
than 25% owned by one enterprise (or jointly by several enterprises) falling outside the definition
of an SME or a micro-enterprise, whichever may apply.
Report Format and Methodology
This study comprises a selection of 40 case studies, 10 drawn from each geographical region:
North, West, East and Southern Africa, covering different sectors of SME activity (industrial,
agricultural, commercial and technological). The focus is on emerging economies with thriving
SME sectors: Egypt, Libya and Tunisia in North Africa; Ghana in West Africa; Kenya and Uganda
in East Africa; and Botswana, Madagascar and South Africa in Southern Africa.
The small sample size is not statistically significant or necessarily representative of wider trends;
this study can only present the profiles of a selection of the businesses operating on the
continent.
A questionnaire was sent to 250 SMEs, drawn from the database of africapractice and its
partners, which has been developed through previous projects with private and public sector
2 organisations.
Selection for inclusion in the report was dependent on the quality and quantity of the
information provided. Where necessary, the questionnaire was followed up with more detailed
interviews to clarify responses and solicit further information. In certain cases, companies
requested anonymity.
The responses were then recorded as prose and quantified for comparison within and between
regions. Each company was given a letter, for graphical reference.
The answers to the following questions are recorded as prose:
• What kind of business does the SME wish to develop?

• What access to different sources of funding is available?
• What form, if any, of assistance did the SME receive from governments/ NGOs/ businesses/
• African Development Bank or other international development finance institutions?
• How does the SME propose to expand the business?
The following answers are recorded graphically:
• What access to different sources of funding is available?

• Which criteria did SMEs have to fulfil in order to access the funding?
• Which financial services have SMEs used?
• Have SMEs sought and did they obtain government approval for their business?
3
Executive Summary
The international spotlight is firmly on SME development in Africa. 2005, the UN Year of
Microfinance, saw the publication of several seminal reports highlighting the importance of SME
development in Africa in driving economic growth and creating prosperity:
• The UK Commission for Africa advocated the creation of an African Enterprise Challenge
Fund, backed by $100 million of investment, designed to support private sector initiatives
targeted at SME development.
• This has been taken up for consideration by the UK’s Department for International
Development (DfID) as a successor to the existing Business Linkages and Financial
Deepening Challenge Funds.
• The African Development Bank launched a Small and Medium Enterprises Facility in
Africa (SMEF-Africa) to complement its existing Franchising to support SMEs
Development Programme.
• The International Finance Corporation publicised the work of its Africa Project
Development Facility (APDF) to support SMEs and, in collaboration with other donors,
established the Private Enterprise Partnership for Africa (PEP-Africa) to build on the
work of the APDF in establishing a strong private sector in Africa.
• UNIDO established a Cluster/Network Development Programme to provide access to

training, information and advice on business management for SMEs. They also benefit from
association with other SMEs, enabling them to identify potential areas of synergy, achieve
economies of scale and lobby collectively for a more SME-friendly business environment.
SMEs are the main source of employment in developed and developing countries alike,
comprising over 90% of African business operations and contributing to over 50% of African
employment and GDP. Many SMEs remain outside the formal and banking sectors (e.g. Magic
Solutions, Egypt) yet harnessing the talent in the informal sector and bringing it into the formal
sector generates increased revenue through taxation; SMEs benefit from protection under
legislation and homogenised standards and supply. Ultimately, some SMEs may become
sufficiently integrated into the legal and banking frameworks that they can work towards listing
on arms of the national Stock Exchanges (e.g. SkyNet, Uganda).
SMEs operate at the lowest levels of the cash economy, usually too small to achieve optimal
division of labour and an internal specialisation in their business operations. Constrained by
limited management and technical skills, they are often unable to respond effectively to business
opportunities, inhibiting growth (e.g. The Musical and Sports, Botswana). SMEs are also
frequently stifled by the lack of a coherent regulatory framework and a legal/policy environment
conducive to business. Indeed, lack of state support can have a direct negative impact on SMEs
(e.g. Rent-A-Candle, Botswana). However, where governments have engaged with SMEs and
provided advice on changes in business legislature, SMEs have been able to use this intelligence
to their commercial advantage (e.g. Al Hoda for Intellectual Property, Libya).
Access to capital is arguably the greatest barrier to SME start-up (e.g. TIM Technology Services,
4 Ghana), along with lack of business administration, marketing and management skills (e.g. DMS,
Egypt). Business cooperatives (e.g. Uganda Women Entrepreneurs Association Ltd, Uganda) have
formed a vital SME support network to share best practices and, in some cases, to cross-
guarantee each other’s funding. A key element to encourage investment in SMEs in Africa is to
reduce SME project financing risk. This requires committed partnerships between donor
governments, multilateral development banks, local banks and the private sector (e.g. 3K&A
Adventures, Ghana).
The vibrancy and diversity of the SME sector in Africa means that generalisations and trends are
difficult to identify. SME growth can be driven either by diversification (e.g. Mad’Délices,
Madagascar) or by specialisation in a niche market (e.g. Greenforest Foods). This growth can be
focused locally (e.g. Ashers Multimedia, Ghana), regionally (e.g. Tonnet Enterprises, Uganda) or
internationally (Bindenagel Consulting, South Africa).
The presence of global companies can directly aid the establishment and growth of SMEs,
through the use of local suppliers and distributors. They have a vested interest in doing so, as
they will ultimately benefit from a thriving SME sector. Innovative initiatives to encourage and
stimulate new businesses by providing seed funding, training and business opportunities in their
supply chains provide not only social but micro- and macroeconomic benefits. Taking equity in
SMEs and franchising along the supply chain (e.g. Menaviacargo, Egypt) ensures that companies
can mitigate risk by controlling the supply/distribution and demonstrates that they are
committed to supporting SME development. This also safeguards a company’s social license to
operate, engages communities and sends out strong signals that the company is acting
responsibly.
5
Case Studies - North Africa
Infoserve, Egypt (A)
Established in 1992, Infoserve employs 2-5 people in the ICT sector. The company sought
government approval to operate before setting up the business and this was eventually granted
in the form of a license. The Egyptian government has recently launched a new fast track
business registration service, with the aim of enabling companies to register formally within 48
hours. This is welcome news, as Infoserve’s experience shows that previously, companies were
obliged to apply to different government departments and that the process was exceptionally
complicated and time-consuming. Infoserve did not seek external finance at start up and is not
insured.
The company uses a current/checking account and a credit card and it did not seek additional
funding after start up. It is not a member of any business support groups and does not have
access to business development or technical advice from any external organisation.
Infoserve has only recently resumed operations as the business was suspended for several years
in order to enable the directors to take advantage of opportunities in other sectors (primarily
broking). Re-entry into the market will be greatly facilitated by an alliance with a partner in
computer software and Infoserve is currently researching potential partners in order to grow the
business. Currently, the company offers consulting services but no products; the intention is to
offer software development and distribution capabilities in the future.
Al-Hoda for Intellectual Property, Libya (B)
Established in 2004, Al-Hoda for Intellectual Property employs 2-5 people in the professional
services sector, specialising in intellectual property rights. The company sought government
approval before setting up the business and this was awarded in the form of a license. Al Hoda
leveraged personal savings to start up the business and does not use any financial services. The
company is not insured, has not sought additional funding after start up and is not a member
of any business support group. Al Hoda has received free advice from the government regarding
changes in legislature and business decrees.
The company intends to grow its business by building on existing relationships and seeking new
clients. Al Hoda services a number of clients in neighbouring countries to Libya and is looking to
consolidate and enhance its position in the regional market.
Wadizzir Investments, Libya (C)
Established in 2002, Wadizzir Investments employs 6-10 people in the medical/health insurance
industry. The company applied for government approval prior to setting up the business and the
Ministry of Economy issued Wadizzir Investments with a license. The company did not seek
external start up finance, nor has it sought additional funding, as its own savings have proved
sufficient to establish and grow the business. It uses a current/checking account and is insured.
6 Wadizzir Investments is a member of the Libyan Chambers of Commerce and Business Council
and has access to free advice on technical issues and business development from multinational
companies in Libya.
Business in Libya is expanding rapidly and Wadizzir Investments has adopted a service-oriented
philosophy in order to cater for local and expatriate clients. The company anticipates formalising
alliances with international blue chip companies in the coming year. In the long term, the
company aims to diversify its operations as the Libyan consumer market becomes more
sophisticated and more demanding. Competition in other sectors will become increasingly
aggressive, so the company believes that it is important to diversify sooner rather than later.
Menaviacargo, Egypt (D)
Established in 2000, Menaviacargo employs 31-50 people in the transport sector, acting as the
sales and handling agent in Egypt for British Airways World Cargo. The company sought
government approval prior to setting up the business and this was granted in the form of a
license to operate at Cairo airport.
At start up, Menaviacargo leveraged its own savings and approached friends and family to
match this sum in funding, in order to raise 1.6 million EGP. This was dependent on providing a
business plan. The company uses a current/checking account and a savings account and it is
insured. After start up, Menaviacargo successfully applied for an additional 1 million EGP from
multinational corporations (MNCs). This was conditional upon providing a business plan. The
company does not belong to any business groups but it has access to technical advice and
business development support from local companies, for a fee.
In the coming 12 months, Menaviacargo aims to build a new warehouse, at a total cost of 4
million EGP, and the company is also negotiating an alliance with a multinational express mail
company. Over the next few years, Menaviacargo intends to expand and diversify the business,
ultimately aiming to lease cargo aircraft in order to operate regionally.
Data Management Systems, Egypt (E)
Established in 1983, Data Management Systems (DMS) employs 200 people in the ICT sector.
DMS is a software house targeting health care, manufacturing, and financial and professional
services. The company provides specific applications and products in each sector. DMS sought
government approval to operate before setting up the business and this was granted in the form
of a business passport. The company has not sought any external finance at start up or
subsequently, as a point of principle to be a debt free company. The business uses a
current/checking account and a savings account and it has insurance. DMS does not belong to
any business support group or cooperative but has access to business development and technical
advice from local companies / consultancies and MNCs.
DMS’s business development plans for the coming year are based on establishing policies and
mechanisms to enable the company to contact distributors in different countries around the
world and begin to market a wide range of products with multiple language capabilities. DMS
will continue to expand branches, at the rate of one new branch every two years, in order to 7
maintain market leadership and to enhance its service offering to clients. The company will
continue to improve its quality processes by adopting the latest quality measurement (CMMI
Level 5 & six sigma) and DMS is now CMMI Level 4 appraised. Research and development (R&D)
plans are progressing as DMS issues updated versions of its applications, using the latest
technologies and adopting business intelligence.
In the long term, the company’s marketing intelligence indicates that its customers and their
consultants believe that DMS has great technical capabilities. Results suggest that the company
is particularly strong in the area of development and product positioning, but that its marketing
and sales capabilities are relatively weak. DMS aims to position its products among the top ten
best-known brands, which will require a comprehensive marketing plan and the leveraging of
substantial funding. The marketing activities will cover: establishing a strong marketing
department; opening a regional office in Eastern Europe, with three branches covering Europe;
opening a regional office in the USA to cover North and South America; and establishing new
branches in North, Central and Southern Africa.
Anonymous, Egypt (F)
Established in 2001, the company employs 11-20 people in the media and communications
strategy sector and its operations extend to website development and corporate event
management. The company sought government approval before setting up the business and this
was granted in 2000 under special law for foreign business and foreign investment, as the
business is a joint German, American and Egyptian venture. As such, the business is well
capitalised and has not required start up or additional finance. The company has access to a
current/checking account and is fully insured. It does not belong to any business support groups
and does not have access to business development or technical advice from any external
organisation.
Over the coming year, the company is interested in extending its alliances with other companies
that have synergies with its operations.
Microtechnic International Tunisie, Tunisia (G)
Established in 2005, Microtechnic International Tunisie (MIT) employs 51-100 people in the
automotive industry. The company sought government approval prior to setting up the business
and this was granted in the form of a permit. MIT did not apply for either start up or additional
finance.
The company uses a current/checking account and an overdraft facility. It has insurance. MIT is
not a member of any business support groups but has access to business development and
technical advice and support from local companies / consultancies, for a fee. Over the coming
year, the company is seeking funding from local banks to finance the purchase of new
equipment in order to develop its competitive advantage and to expand into new markets. MIT
would also consider alliances with other companies to expedite this expansion. In the longer
term, the company aims to become one of the leading automotive suppliers in Tunisia.
8
Active PR & Marketing Communications, Egypt (H)
Established in 2003, Active PR & Marketing Communications employs 6-10 people in the media
sector. The company sought government approval to operate before setting up the business and
this was awarded in the form of a permit. Active did not apply for external start up or additional
finance.
The company uses a current/checking account and is insured. It is a member of the American
Chamber of Commerce and the Egyptian Businessmen’s Association but has no access to
business development or technical advice from any other organisation. Active PR & Marketing
Communications is in the process of finalising an affiliation agreement with a leading
international PR agency and is also expanding the business in North Africa.
Magic Solutions, Egypt (I)
Established in 2001, Magic Solutions employs 6-10 people in the ICT sector. The company has
not sought any form of government approval to operate and is not insured. Magic Solutions
leveraged its own savings to meet start up costs of 15 000 EGP. The company uses a
current/checking account and has a credit card.
After start up, the company successfully approached friends and family for 15 000 EGP in
additional funding to grow the business, on the basis of trust. Magic Solutions is not a member
of any business support group, but does have access to business development and technical
advice from local companies / consultancies on a pro bono basis.
Over the last few months, the company has developed its core capabilities from small-scale web
projects into large-scale web-based IT solutions. Currently, Magic Solutions has low cash flow
and is seeking funding to cover the shortfall and to support the continued expansion into the
company’s target markets. Finally, additional funding would enable the company to develop its
R&D capacity in order to enhance its planned product mix. As soon as key products and services
are in place, the company will seek alliances with strategic partners. Due to the nature of the
market, the company is not planning more than two years in advance.
Environmental Civil Engineering Consultancy Centre (Envirocivec), Egypt (J)
Established in 1994, Envirocivec employs 200 employees in the engineering consultancy sector,
providing a range of services including architectural, structural, sanitary, plumbing and
construction supervision consultancy. The company sought government approval to operate
before setting up the business and this was granted in the form of a license to establish a
company.
Envirocivec leveraged personal savings of 2000 EGP to fund its start up, which was structured as
a limited liability partnership between two executive partners and five sleeping partners. The
company uses a current/checking account but is not insured. The company did not seek
additional finance after start up.
Envirocivec has access to business development and technical advice from local companies / 9
consultancies. The company has not provided information on future growth plans, as it considers
growth unpredictable.
Presentation of data – North Africa
• 6 of the 10 companies are insured
• 3 companies applied for start up finance
The table below illustrates the amounts of start up and additional funding that each company
applied for:
Start up finance in US$ Additional finance in US$

A 0 0
B 0 0
C 0 0
D 275 862 172 413
E 0 0
F 0 0
G 0 0
H 0 0
I 2856 2856
J 3448 0
Due to the disproportionately large amount of funding for Menaviacargo (D), representing this
data graphically would have skewed the axes and rendered comparison between all other
companies impossible.
• 2 companies sought additional funding. Both were successful
• 3 companies belong to business groups: Chambers of Commerce (Egyptian and

American); Businessmen’s Council and business cooperatives.
• 7 companies have access to business development and technical advice, primarily

from local companies but also from MNCs and government.
• Of these 7 companies, 4 have to pay a fee. This is not dependent on whether the
10 source is private/public sector.
Additional Finance Start up finance
I
I
J
J
11
F
F
E
E
C
B
C
B
H
G
D
A
H
G
D
A
Name of company
Local banks
Government
Donor/Intl institution
Local companies
Philanthropic foundations
MNCs
Source of finance Friends/ family
Own savings
ADB
Cooperative
No. of employees
Business plan
Start up and additional finance applied for by each SME: source of funding and criteria
Bank account
Minimum turnover
Credit history
References
Equity
Criteria to access the finance

Formal registration
Business support
Collateral
Joint venture
North Africa
Case studies – West Africa
3K&A Adventures, Ghana (A)
Established in 1996, 3K&A Adventures employs 51-100 people in the agro-processing sector.
The company has not sought government approval to operate but it is insured. 3K&A
Adventures approached local banks, government and the UK Department for International
Development (DfID) for start up finance to supplement the investment from its own savings. The
total amount of funding sought was US$ 1.875 million, of which banks provided US$ 850 000,
government provided US$ 200 000, DfID provided US$ 325 000 and the company drew on
personal savings of US$ 500 000. In order to secure the funding, 3K&A Adventures was required
to provide a business plan and collateral; equity was offered as further collateral to secure the
funding.
The company uses a current/checking account and overdraft and loan facilities. 3K&A
Adventures sought additional finance of US$ 1.62 million after start up and applied successfully
to the same sources, under the same conditions as its initial arrangements. The company is not
a member of any business support group and it has access to business development and
technical advice from NGOs and from DfID, for a fee.
Over the coming year, the company predicts healthy growth but requires additional funding to
secure adequate supplies of raw materials, as it relies on a seasonal crop. 3K&A Adventures
estimates that it can grow the business over the next few years to about four times its current
capacity, provided it can access funding at the right time.
Zebra Aluminium, Ghana (B)
Established in 1995, Zebra Aluminium employs 31-50 people in the manufacturing sector. The
company sought government approval after it had established its business and this was granted
in the form of a factory inspectorate license, renewable annually. The company required a total
of US$ 50 000 start up finance and approached local banks (US$ 15 000) and friends and family
(US$ 10 000) to supplement the US$ 25 000 investment from personal savings. This was
awarded on production of a business plan and collateral to secure the loan.
Zebra Aluminium has a current/checking account and access to loan facilities and it is not
insured. After start up, the company approached friends and family for US$ 25 000 in additional
funding to develop the business and this was granted, on condition of a business plan and
minimum turnover. The company is a member of the Association of Ghana Industries and has
access to business development and technical support and advice from local companies /
consultancies, donors / international institutions and the government, for a fee.
In the coming year, Zebra Aluminium requires an increase in working capital in order to finance
its stocks and in the long term, foresees capital investments for expansion, in the form of venture
capital, concessionary loans and a joint venture with a foreign company.
12
Crystal Chris EMT, Ghana (C)
Established in 1995, Crystal Chris EMT employs 11-20 people in the textiles industry, producing
curtain fabrics and accessories. The company sought government approval prior to establishing
its business and this was granted in the form of a business certificate. Start up was financed by
personal savings of 4 million GHC and friends and family, who provided 6 million GHC. This was
granted on condition that the company open a bank account.
Crystal Chris EMT uses a current/checking account and also has access to loan facilities. The
company is insured and sought additional finance after start up of 100 million GHC. Crystal Chris
EMT applied to local banks, which stipulated that the company provide a business plan and
collateral and that the company had an account with the bank. The application was refused.
The company is a member of a support group for small businesses and has free access to
business development and technical advice from local companies/consultancies. Over the
coming year, Crystal Chris EMT aims to grow the business into distribution and retail of textiles,
cleaning detergents and interior decoration accessories. Such expansion would require at least
200 million GHC. The company is also seeking alliances with other companies but has yet to
conclude an agreement. In the long term, Crystal Chris EMT intends to become the leading
wholesaler of curtain fabrics, with a one stop shop in a mall, selling interior decoration
accessories and cleaning products.
TIM Technology Services, Ghana (D)
Established in 2001, TIM Technology Services employs 6-10 people in the ICT sector, providing
training and consultancy on software and PC sales. The company sought government approval
prior to setting up the business and this was granted in the form of a permit and certificate of
incorporation.
TIM Technology Services applied to local banks for start up finance of 50 million GHC but access
to finance has proved a major barrier to the growth of the business. The company’s presentation
of a sound business plan, proof of the number of employees and signed contracts were not
sufficient for banks to release funds, without substantial collateral as security. TIM Technology
Services switched banks, as it was unable to meet the asset requirements for collateral at its
original bank, but the second bank decreed, even after a year, that TIM Technology Services had
not been a client for long enough to qualify for a loan. It did however, grant an overdraft facility
of 5 million GHC, which the company repaid within one month, and it now believes the
prospects for securing a loan are brighter as a result. Interest rates charged by the banks and
other lending organisations average up to 23.5% per annum as a base rate and TIM
Technology Services found that repaying the principal plus the base rate within one year (as
stipulated by the bank) was impossible; the company suggests extending the repayment period
to 18 months or two years.
The company uses a current/checking account, overdraft and loan facilities and is in the process
of becoming insured. After start up, TIM Technology Services reapplied for funding of 60 million
GHC from donors/international institutions, which stipulated that the company provide evidence
of minimum turnover, which it duly presented, but the application was refused on the grounds
of profitability in the face of stiff competition. The company is a member of the business club at 13
a local bank and is also a member of an industry group, for a fee.
In the coming year, the company intends to reapply to the bank for a loan to finance its
expansion and is also planning to approach the government for assistance. TIM Technology
Services has partnered with Hewlett Packard, SPSS-USA and Softline Accpac, which should boost
its credibility when applying for finance. TIM Technology Services recently participated in an
international tender for the Ministry of Education but although the company is the authorised
dealer of SPSS software (critical software for the tender) in the country, the bank proved
unwilling to prepare a bid security of 2.5 % for the tender amount. Ultimately, the company
was unable to submit the completed tender document due to its inability to secure a bid
security from the bank. However, long-term growth prospects are good, as the company is
forging strong bonds with the other two companies. Funding would enable TIM Technology
Services to establish its own premises and expand the business.
Pikof Ghana Ltd, Ghana (E)
Established in 1994, Pikof Ghana Ltd employs 6-10 people in the pharmaceutical manufacturing
industry. The company sought approval from the government to operate, prior to setting up the
business, and this was granted in the form of a certificate of registration. The company applied
for start up finance of 200 million GHC, providing 50% from its personal savings and
approaching friends and family to cover the remaining 50%. This was approved, after Pikof
Ghana provided a business plan.
The company uses a current/checking account and is not insured. It has not sought additional
funding and is not a member of any business support group; neither does it have access to
business development or technical advice from any external party.
Pikof Ghana Ltd requires further funding of US$ 200 000 in order to grow the business: US$ 100
000 in order to establish production of pure steel nails, by acquiring two additional production
lines from China and sourcing raw materials locally. The remaining US$ 100 000 would be
invested in its commercial operations, principally for the import of pharmaceutical products. The
company is open to alliances with other companies but is not actively seeking them. Pikof Ghana
Ltd intends to expand its trade in pharmaceuticals to cover the whole of the West African region
as a long term goal, which would require about US$ 400 000 capital outlay; the need for co-
ownership is critical.
The company highlighted that it considered the most prohibitive barriers to the growth of SMEs
in West Africa to be high bank interest loan rates; an unstable exchange rate; discrimination in
the distribution of funds; political instability; and competition from other emerging market
economies such as Malaysia and Thailand.
Delta Unic, Ghana (F)
Established in 1999, Delta Unic employs 6-10 people in the ICT and office supplies sector. The
company has not sought government approval for its operations, is not insured and did not seek
external funding at start up. It uses a current/checking account and has access to overdraft and
14 loan facilities.
After start up, Delta Unic successfully applied for 20 million GHC in funding from local banks,
which stipulated formal registration, minimum turnover, an account with the bank and
collateral, in return for an equity stake in the business. The company is not a member of any
business support groups but has access to business development and technical advice from local
companies/consultancies, for a fee.
In the short term, the business is still at an early growth stage and is expanding concentrically to
meet customers’ needs. Delta Unic started by selling stationery and computer parts and has
developed sufficiently to offer customers a choice of PCs and networking/communications
equipment. The company estimates it needs 7 billion GHC to drive growth in these areas and is
seeking alliances with other companies in order to achieve this. In the long term, Delta Unic aims
to become a top concentric business and estimates that 90% of the ICT market in Ghana is
currently untapped. The company would be interested in developing a conglomerate strategy
with other corporates in the areas of food processing and pharmaceuticals, which would require
an investment of 50 billion GHC to cover existing and projected costs.
Ataful Polythene, Ghana (G)
Established in 1979, Ataful Polythene employs 2-5 people in the manufacturing sector. The
company sought government approval prior to setting up the business and this was awarded in
the form of a certificate of registration. Ataful Polythene did not require external finance to start
up the business but did obtain insurance.
The company uses a current/checking account and has access to loan facilities. After start up,
the company successfully applied for funding of 500 million GHC from local banks, contingent
on the provision of a business plan, evidence of formal registration, references, credit history, a
bank account and collateral. Ataful Polythene is not a member of any business support groups,
nor does it have access to business development or technical support from any external party.
In the coming 12 months, the company is drawing on a loan facility of 500 million GHC,
renewable each year. In the long term, the company intends to acquire new cutting and
manufacturing equipment and plans to finance this with an additional bank loan.
Easiware Systems Ltd, Ghana (H)
Established in 1994, Easiware Systems Ltd employs 6-10 people in the ICT sector. The company
has not sought government approval to operate and at start up, it approached local banks,
friends and family, governments and donors/international institutions for finance. In total, the
company aimed to obtain US$ 50 000 funding but was unsuccessful in raising more than US$
2000, provided by friends and family.
The company has a current/checking account and is not insured. After start up, Easiware Systems
applied for 20 million GHC from local banks, which stipulated that the company open a bank
account with them. Easiware Systems duly opened an account and was granted the funding. The
company does not belong to any business support groups but has free access to business
development and technical advice from local companies/consultancies.
15
In the coming year, Easiware Systems predicts strong growth as sales of products to individual
and corporate customers are increasing quickly, enabling the company to reinvest the profits into
growing the business. Easiware Systems is currently exploring software development but is
having difficulty in convincing customers and banks of the tangibility of its operations. This, and
excessive bureaucracy, is slowing but not prohibiting the growth of the business. The company
has been operational for three years and each year has seen its revenue double. Although all
profits are reinvested, the company has been refused loans, as revenue is sometimes erratic.
Easiware Systems plans to obtain additional funding in order to expand its premises, invest in a
vehicle and new equipment, and to leverage greater working capital.
Ashers Multimedia, Ghana (I)
Established in 2000, Ashers Multimedia employs 2-5 people in the ICT sector. The company
sought government approval to operate after setting up the business and this was granted two
months later. Ashers Multimedia applied to local banks for funding to supplement its own
savings at start up but the banks refused finance. Of the US$ 10 000 required to establish
operations, Ashers Multimedia provided US$ 5000 from personal savings and a family member
provided a further US$ 2000. A hire purchase company loaned US$ 3000 and stipulated that
Ashers Multimedia provide references and pay back the loan in US dollars. This means that if the
Ghanaian cedi depreciates, Ashers Multimedia will pay more in repayments, relative to the
amount loaned. The company stated clearly that it feels under pressure from the conditions
imposed by the hire purchase company and the high interest rate of 34%.
The company uses a current/checking account and is in the process of insuring its business.
Ashers Multimedia sought additional finding of 50 million GHC after start up and applied to a
local bank, which again refused finance. The bank was invited to visit the premises that the
company had secured after signing a contract to provide 100 computers to set up an ICT centre
for Accra Polytechnic, but the bank refused both the offer and the application for finance. After
the company suggested resigning its membership of the bank’s two business clubs, the bank
agreed to reconsider the application. Ashers Multimedia suggested that the bank seems more
interested in soliciting fees from small businesses to join its business clubs, than it is in supporting
and enabling those businesses to grow. The company highlighted the benefits of banking with
small banks as they prioritise SME clients and are more pro-active in offering financial services.
At the time of applying for finance from the bank, Ashers Multimedia had received US$ 10 000
from a friend to fund the contract.
In addition to the two business clubs at the bank, Ashers Multimedia is also a member of the
Internet Café Operators Association of Ghana. The business clubs at the bank are mandated to
organise free quarterly seminars but these are not always organised. In the coming year, the
company is positive about its opportunities for growth, having signed the contract with Accra
Polytechnic. The total finance required is US$ 50 000 and despite lack of finance from the bank,
the ICT centre for the polytechnic has been established. Ashers Multimedia aims to make US$
6000 per month. In the next five to ten years, the company aims to become one of the top cyber-
cafes in Ghana, which will require an investment of US$ 200 000 but lack of collateral means
the directors are pessimistic about their ability to secure such funding.
16
Eskay Therapeutics Ltd, Ghana (J)
Established in 1998, Eskay Therapeutics employs 51-100 people in the pharmaceutical

manufacturing sector. The company sought government approval to operate before setting up
the business, which was awarded in the form of a license. The company did not require external
start up finance and obtained insurance for its operations.
After start up, Eskay Therapeutics successfully applied for US$ 50 000 from donors/international
institutions, which required evidence of a bank account. The company is not a member of any
business support group and does not have access to external support on business development
or technical issues.
In the coming year, Eskay Therapeutics intends to raise US$ 500 000 for a new plant and all the
associated new equipment, through financial institutions and/or banks. In the next five to ten
years, the company expects to grow and increase turnover by 30-40% year on year.
Presentation of data – West Africa

• 2 companies are in the process of becoming insured
• 3 companies are not insured
The graph below illustrates the amounts and proportions of start up and additional funding
that each company applied for:
A 3K&A Adventures
B Zebra Aluminium
C Crystal Chris EMT
D TIM Technology Services
E Pikof Ghana Ltd
F Delta Unic
G Ataful Polythene
H Easiware Systems
I Ashers Multimedia
J Eskay Therapeutics 17
This graph excludes data for 3K&A Adventures (A), as the finance accessed (US$ 1.875 million
start up and an additional US$1.616 million subsequently) was substantially greater than any
other company. Representing this graphically would have skewed the axes and rendered
comparison between all other companies impossible.
• 9 of the 10 companies sought additional funding
• 7 of the 9 companies applying for additional finance were successful
• 4 companies belong to business groups: bank business clubs; other bank groups;
the Internet Café Operators Association of Ghana; support groups for small
business; the Association of Ghana Industries.
• 7 companies have access to business development and technical advice, primarily

from local companies but also (in descending order of frequency) from:
donors/international institutions, government, NGOs and local bank business
clubs.
• Of these 7 companies, 4 have to pay a fee. This is not dependent on whether the
source is private/public sector.
18
I
I
J
J
19
F
F
E
E
C
B
C
B
H
G
D
A
H
G
D
A
Name of company
Local banks
Government
Local companies
MNCs
Own savings
ADB
Cooperative
No. of employees
Business plan
Bank account
Minimum turnover
Credit history
References
Equity

Formal registration
Business support
Collateral
Joint venture
West Africa
Case Studies – East Africa
Cellar Distributors Ltd, Kenya (A)
Established in 1995, Cellar Distributors Ltd distributes wine and spirits in Kenya. The company
employs 6-10 people and sought government approval prior to setting up the business. The
licence was granted a year before the company became operational and 200 000 KES in funding
was sought from local banks, which required collateral to approve the funds.
Cellar Distributors uses a current/checking account, overdraft and loan facilities and the
company is insured. It sought additional funding after start up, in the region of 500 000 KES and
again, approached local banks for this funding, providing collateral to secure the funds
successfully. The company does not belong to any business support or cooperative groups and
has no access to business development or technical advice.
The company has recently entered into a distribution agreement with a major South African
manufacturer and is currently seeking funding from local banks to support this expansion. Cellar
Distributors highlights that funding at reasonable interest rates would greatly facilitate its
growth. The company’s 3-5 year plan is to enter into local manufacturing with technical support
from the South African principal. Funding requirements will be in the region of 30 million KES,
which the company intends to raise through collateral and the business plan.
SkyNet Ltd, Uganda (B)
Established in 1993, SkyNet now employs 51-100 people in its express courier business. The
company sought government approval after establishing itself as a business and was granted an
annual license to operate as a courier business, which cost US$ 5000. SkyNet sought 15 million
UGS in funding from local banks when starting up the business, which stipulated that SkyNet
provide evidence of a bank account, collateral and references. The company uses a
current/checking account and overdraft facilities and has insurance.
After start up, SkyNet sought 45 million UGS in additional funding from local banks, who again
required evidence of a bank account and collateral and, in addition at this stage, a business plan
and credit history before approving the funds. SkyNet was successful in its application for
funding and is also a member of a private sector umbrella body. The company has access to
business and technical advice and support from local companies and consultancies, for a fee.
SkyNet is currently seeking an angel investor to finance its three-year plan to enable the
company eventually to list on the second tier of the Ugandan Stock Exchange. This would require
at least US$ 50 000 initially, over the three years. In the long term, the company foresees its
business moving away from the delivery of international documents towards more national
document and non-document delivery, freight forwarding, goods distribution and aircraft
handling. SkyNet will need at least US$ 100 000 over the following three years from external
sources, in addition to its own resources.
20
Greenforest Foods, Kenya (C)
Established in 2001, Greenforest Foods employs 6-10 people in the manufacture of beekeeping
and other apiculture equipment and in honey bottling. The company sought government
approval after establishing its business, which was granted immediately in the form of a
registration certificate. Greenforest Foods is a member of a business cooperative, whose main
source of income is wages and salaries. The company supplemented its own savings of 200 000
KES by approaching the cooperative for start up finance of 300 000 KES. The cooperative loan
was secured by guarantors on provision of a bank account, credit history, references and
evidence of formal registration. The cooperative then took equity in the business.
Greenforest Foods uses a current/checking account and overdraft facilities and borrows bridging
capital from friends when cash flow is limited. The company is insured and sought additional
financing of 3.1 million KES after start up, from local banks and the cooperative. This was
dependent on provision of credit history, bank account and collateral and enabled the
cooperative to take a greater equity share in the business. Greenforest Foods fell short of its
funding target by 2 million KES, having secured only 900 000 KES from the cooperative and 200
000 KES from the bank. The company’s bank statement and business plan demonstrated clearly
that it needs 3 million KES to operate optimally and it has no access to business or technical
advice from a support organisation beyond the cooperative.
Over the next two years, Greenforest Foods aims to increase sales to 100 metric tons of honey
and 20 metric tons of beeswax. This will translate to revenue of 22 million KES for honey and 6
million KES for beeswax, at current prices and exchange rates. The company intends to operate
within a gross margin of 50% and manage a sales rollout to upcountry retail outlets, in addition
to the premier outlets (Uchumi and Nakumatt supermarket chains) where the company already
has a presence. Greenforest Foods will establish firm supply chain management to ensure high
quality of raw materials, reliable supply and eventual certification by quality and consumer
agencies.
Greenforest Foods is working to build awareness about its leadership in apiculture and about its
premier brands in honey and beeswax. The company is exploring packing in portion packs to
target hotels (own-branded), kiosks and dukas (company-branded). The company has mobilised
farmers in the lower parts of Eastern Province in Kenya to enter into contract farming;
Greenforest Foods will supply the hives at cost and the farmers supply the honey and other
apiary products for guaranteed minimum returns. The company invites alliances geared towards
linkages to international markets, financial support to farmers and technology transfer.
The ultimate goal of Greenforest Foods is to raise the production quantities and quality to
facilitate entry to the lucrative European and American markets, to pack and brand honey for
export to leading retail chains such as Wal-Mart in the US and Tesco in the UK. In order to
achieve this, the company will need to increase the production of beeswax to 40 metric tons a
year and will do so by starting to manufacture wax solar melters, which the contract farmers will
use. This operation will need approximately ? 110,000.
21
Alpha Technologies, Kenya (D)
Established in 2002, Alpha Technologies employs 6-10 people in the engineering/security

industry. The company sought government approval prior to establishing itself as a business and
this was granted several months afterwards. Alpha Technologies supplemented its own savings
by applying for start up finance from local banks and friends and family, in the region of 200
000 KES, which was subject to providing evidence of a bank account, a business plan and
references.
The company uses a current/checking account and a savings account and is not insured. After
start up, Alpha Technologies successfully sought additional funding of 600 000 KES from local
companies, providing references and a Local Purchase Order (LPO) as security on the loan. The
company is not a member of any business group but has access to technical and business
development support from local companies and consultancies, for a fee.
The annual turnover of the business is increasing due to the foundation marketing already
undertaken, the growing economy and the new concept of outsourcing services, which is
attracting increasing attention and interest. Alpha Technologies seeks capital of up to 5 million
KES to support its expansion and is approaching IFC for this funding. This would cover human
resource recruitment, expansion of premises and capital good acquisitions. Long term, the
company is looking to enter the regional and international markets and to venture into imports
and exports of commodities.
Alpha Technologies has a capital goods requirement for the next year and this will be met
through a leasing facility from a local bank or from revenues ploughed back into the business
after demonstrating a healthy cash flow. In order to expand the current business, Alpha
Technologies may need to leave the current premises. The company intends to go mainstream
with its Human Performance Technology product and in this case, the financial requirements
would be to cover a marketing budget, recruitment costs, relocation fees and insurance for
different leased and branded vehicles.
Tonnet Enterprises, Uganda (E)
Established in 1995, Tonnet Enterprises employs 2-5 people in an agro- and food-processing
machinery business. The company sought government approval prior to establishing itself as a
business and was granted a certificate of registration several months before it became
operational.
Tonnet Enterprises did not seek funding when setting up the business but did seek funding at a
later stage. This was in the region of 40 million UGS and was sourced from local banks, which
stipulated that Tonnet Enterprises provide a business plan, evidence of a bank account and
access to business support, before approving the funds. The company uses a current/checking
account and loan facilities and it has insurance. Tonnet Enterprises is a member of a business
cooperative and has access to technical support and advice from local companies and
consultancies, for a fee, and from an NGO, at no cost.
The company aims to improve on the quality of the machines produced and to build sufficient
22 capacity to satisfy customer demand. In the long term, Tonnet Enterprises intends to leverage
technology to improve the design of the products and to expand its reach into markets in
neighbouring countries such as Sudan, Kenya, Zambia, Democratic Republic of Congo (DRC) and
Rwanda.
Chico Travel Bureau, Uganda (F)
Established in 1995, Chico Travel Bureau employs 2-5 people in the travel business. The company
sought government approval prior to establishing itself as a business and was granted a license
to operate one year later. Chico Travel Bureau used its own savings (US$ 3300) and approached
family and friends for additional funding (US$ 3000) before setting up the business.
Funding requirements included evidence of a bank account and a business plan and the investors
took equity in the business. Chico Travel Bureau uses a current/checking account and loan
facilities and is insured. The company successfully sought additional funding from family and
friends after start up, in the region of US$ 2000 and again provided a business plan and equity.
The company is a member of a business cooperative and occasionally has access to free seminars
providing technical and business advice, hosted by a local bank.
Chico Travel Bureau needs to replace the current tourist vehicles with new vehicles to enhance
their service and is currently applying to the bank for funding to cover these costs. The company
is also seeking an alliance with another company to increase capital sufficiently to be able to
move to larger premises and to purchase better vehicles and more efficient communications
facilities: computers, radio and telephone.
National Medical Stores, Uganda (G)
Established in 1992, National Medical Stores employs 11-20 people in the health industry. The
company sought government approval after establishing itself and was granted a license in
1994. National Medical Stores applied for funding from local banks (US$ 700) and family and
friends (US$ 500) when setting up the business, to augment personal savings of US$ 1300. The
criteria to access this funding were: minimum turnover and access to business support.
The company uses a current/checking account, savings account and loan facilities and has
insurance. After start up, National Medical Stores were awarded credit by a supplier in the region
of US$ 50 000, after supplying a full credit history. The company is a member of a support group
for small businesses, which provides technical assistance and advice on business development,
for a fee.
Over the coming year, National Medical Stores plans to acquire new technologies and to travel
abroad for greater exposure. The 2006 budget is US$ 60 000, most of which will be generated
from clinics. In the next ten years, the company would like to continue to update its technology,
to increase the number of staff and to implement staff development programmes. This will
require funding in the region of US$ 800 000.
23
Morgenthau Stirling, Uganda (H)
Established in 2003, Morgenthau Stirling employs 2-5 people and provides human performance
technology services in training emotional intelligence, supported by PR and marketing related
projects. The company has not sought government approval to operate and it approached
friends and family for 5 million UGS as start up finance for the business. The company has a
current/checking account and overdraft facilities and is not insured. After start up, Morgenthau
Stirling successfully sought a further US$ 2500 from friends and family to finance the growth of
the business. The company does not belong to any business groups and does not have access to
any kind of technical or business development support or advice.
The company’s overall business philosophy is to forge alliances with several different companies
in the same industry. By the end of 2006, the company aims to have established links with one
or two partners in order to provide an integrated solution for clients. For instance, advertising
agencies could ally with sales and marketing management firms, which could ally with a human
performance company such as Morgenthau Stirling, in order to add value to clients.
Karen Assisted Retirement Home, Kenya (I)
Established in 2002, Karen Assisted Retirement Home (KARH) employs 21-30 people in an
assisted living and retirement home for the elderly. The company sought government approval
two years after establishing itself as a business; no license was issued but papers were filed with
the Registrar of Societies. The company is not insured.
KARH leveraged personal savings in the region of US$ 450 000 to fund the start up. This was
supplemented by a modest bank loan of 1 million KES, with an affordable rate of interest
(approx. 3.5% above the prime rate), due largely to the earlier agreement of an overdraft facility,
secured by cash. KARH’s experience suggests that interest rates may ultimately depend on a
company’s ability to negotiate and KARH highlighted that the smaller financial institutions tend
to be significantly more flexible and accommodating than the larger international banks,
building societies and public sector financial institutions.
After start up, KARH applied to the International Finance Corporation (IFC) for additional
funding of US$ 400 000 and provided a business plan, as stipulated by the institution. The
funding has been approved and should be disbursed shortly. KARH emphasised the importance
of timeliness in accessing finance and stated that the length and complexity of the funding
process is a serious barrier to business growth. Small businesses depend on their ability to remain
dynamic and flexible, in order to respond to the changing needs of their market. This ability is
severely constrained if funding procedures last in excess of 12 months and consume time that
directors could more profitably spend growing and developing the business.
The company is a member of the International Association of Ageing and is a pioneer in the field
of elderly care in Africa. There are currently no assisted living facilities anywhere on the
continent; KARH is quite distinct from hospitals and nursing homes. KARH’s aim is to be best in
class and to act as a source of advice and service to others in the industry. The IFC funding should
be sufficient for KARH’s growth as outlined in its business plan. With the collapse of the
traditional African family systems, many older people will need safer places to live and to spend
their time; these people will become day care and residential clients for KARH.
24
Uganda Women Entrepreneurs Association Ltd (UWEAL), Uganda (J)
Established in 1987, UWEAL is a Business Member Organisation (BMO) employing 6-10 people.
The organisation applied for government approval prior to establishing its operations and was
granted the right to charge membership and annual subscription fees. UWEAL is funded by
women entrepreneurs who pay membership fees and, depending on their status (individual or
corporate), a tiered system of subscription rates, renewable annually. Government approval was
dependent on formal registration and the organisation is also insured.
UWEAL uses a current/checking account and a savings account and sought 300 million UGS
from a local bank after start up, to fund its continued growth. This was contingent on the
provision of a business plan and the funding application was successful. UWEAL is a member of
the Private Sector Foundation Uganda (PSFU) and can access business and technical advice and
support from NGOs and donors/international institutions, for a fee.
The current programme focuses on service delivery and advocacy; funding requirements will be
in the region of 400 million UGS for the 2006 financial year and the same amount for each year
thereafter. This will cover administration/operational costs, programme activities (service delivery
and advocacy), institutional costs, the construction of a resource centre/secretariat and the
purchase of a company vehicle. The association is growing fast and attracting on average 40
women entrepreneurs to join each year. UWEAL is seeking alliances with other institutions and
organisations that promote the economic empowerment of women.
Presentation of data – East Africa
• All 10 companies applied for additional funding after start up
• 9 companies were successful in obtaining the required funding

• 1 company was partly successful in raising additional funding
25
A Cellar Distributors
B SkyNet
C Greenforest Foods
D Alpha Technologies
E Tonnet Enterprises
D Chico Travel Bureau
G National Medical Stores
H Morgenthau Stirling
I KARH
J UWEAL
The graph excludes data for Karen Assisted Retirement Home (I) as the finance accessed (US$
450 000 at start up and an additional US$ 400 000 subsequently) was substantially greater than
any other company. Representing this graphically would have skewed the axes and rendered
comparison between all other companies impossible.
This was also the case for Uganda Women Entrepreneurs Association Ltd (UWEAL) (J) which did
not access start up finance but applied for 300 million UGS (US$ 163 934) in additional funding
at a later stage.
• 7 companies are members of a business group: business cooperative; support

group for small businesses; the International Association of Ageing; the Private
Sector Foundation Uganda (PSFU).
• 6 companies have access to business development or technical advice and support

from an external organisation. This is primarily from local companies, but also from
NGOs, business support groups, donors/international institutions and bank
business clubs.
• 5 of the 6 businesses that have such support are required to pay for the service.
This is not dependent on whether the source is private / public sector.
26
I
I
J
J
27
F
F
E
E
C
B
C
B
H
G
D
A
H
G
D
A
Name of company
Local banks
Government
Local companies
MNCs
Own savings
ADB
Cooperative
No. of employees
Business plan
Bank account
Minimum turnover
Credit history
References
Equity

Formal registration
Business support
Collateral
Joint venture
East Africa
Case Studies – Southern Africa
Rent-A-Candle, Botswana (A)
Established in 2001, Rent-A-Candle employs 6-10 people in a flower shop, which also
manufactures candelabra and candles for decorations. The company sought government
approval before setting up the business and this was awarded in the form of a license. Rent-A-
Candle required 100 000 BWP as start up finance: 50 000 BWP to buy the Rent-A-Candle
franchise and the remaining 50 000 BWP to buy premises for the flower shop. The company
successfully applied to local banks for this funding, which was contingent on the business
employing a certain number of employees, generating a minimum turnover and providing
references. It uses a current/checking account and overdraft and loan facilities and it has
insurance.
Rent-A-Candle sought additional funding of 40 000 BWP after start up and again successfully
approached local banks, subject to the same conditions. The company is not a member of any
business group but it has access to business development and technical advice from local
companies.
The company is seeking alliances with other companies and will require additional funding if it
is to consolidate and grow the business, for example funding to buy its own stock, rather than
having to hire the same materials several times from external suppliers. The growth of Rent-A-
Candle over the past year has been severely constrained due to the following factors:
1 The devaluation of the pula

2 Botswana’s small population, which translates to low demand
3 The cost of importing wax and flowers from South Africa, as there are no local suppliers
4 New business in Botswana is usually slow to generate trust from suppliers/clients
5 High interest rates from the banks (over 20% p.a.)
6 The seasonal nature of the business and the company’s lack of capacity to store flowers
for long periods in order to respond to orders at short notice
7 Lack of government support: state events at hotels, which should be supplied by local
businesses such as Rent-A-Candle, almost exclusively source all decorations and labour
from South Africa
With greater government support for indigenous business, favourable lending rates and
enhanced access to finance from local banks, the company is confident it can grow the
business profitably in the coming years.
AT-DM, Botswana (B)
Established in 1989, AT-DM employs 2-5 people in the ICT sector. The company sought
government approval prior to setting up the business and this was granted in the form of an
incorporation certificate and a trading licence. The company is insured, uses a savings account
and overdraft facility and did not apply for start up finance.
After start up, AT-DM successfully applied for additional funding of 150 000 BWP from local
28 banks and local companies, to supplement the investment of its own savings. This was
contingent on demonstration of the company’s minimum turnover and provision of collateral
and credit history. AT-DM is a member of the Botswana Confederation of Commerce, Industry
and Manpower (BOCCIM) and of the business club at a local bank. This enables the company to
access technical and business development support and advice and it has also received similar
support from the government.
AT-DM is in need of additional funding to increase its working capital and to finance staff
training. The company is currently considering alliances with other companies in order to achieve
this. In the long term, AT-DM aims to invest in human resource development in order to raise the
standard of staff training and ultimately, to employ more staff.
Ingenojya, Madagascar (C)
Established in 1999, Ingenojya employs 31-50 people in the ICT sector. The company has not
sought government approval to operate and it approached local banks and venture capitalists to
secure start up finance of ?77 000. This was dependent on the company providing the bank with
references and a business plan.
Ingenojya uses a current/checking account and has insurance. The company did not require
additional funding after start up and it is a member of a business cooperative. Ingenojya does
not have access to external business development or technical support.
The company is currently seeking funding to grow its business and in the long term is looking at
alliances with other companies abroad, in order to expand the business offshore.
Mad’Délices, Madagascar (D)
Established in 2001, Mad’Délices employs 51-100 people in the catering industry. The company
sought government approval before setting up its business and this was granted in the form of
a patisserie license in 2001 and upgraded to a restaurant license in 2005. Mad’Délices applied
for start up finance of 150 million FMG from local banks and the African Development Bank
(ADB) to supplement its own savings. The banks required a business plan and references to
secure the loan.
Mad’Délices uses a current/checking account, a credit card and loan facilities and it has
insurance. The company sought additional funding of 600 million FMG after the start up finance
and again applied to the ADB and local banks but also applied to donors/international
institutions and MNCs and it leveraged more of its own savings. The criteria for accessing this
funding, which the company managed successfully, were to provide references and a business
plan and to enter into a joint venture with another company. Mad’Délices is a member of a
support group for small businesses and has access to business and technical support from local
companies, for a fee, and from an NGO, at no cost.
In the coming year, the company’s funding requirements are initially 600 million FMG and it is
seeking alliances with other companies to develop the business in other African countries,
including the Indian Ocean islands. In the long term, the company aims to access funds up to
US$ 1 million and to leverage alliances to develop the business in Europe and America. 29
Ultimately, Mad’Délices aims to diversify its operations into tour operating and hostels.
Sigma SA, Madagascar (E)
Established in 2001, Sigma SA employs 51-100 people in the industrial chemicals manufacturing
sector. The company sought government approval prior to setting up the business and this was
granted in the form of a permit earlier in 2001. Sigma applied for start up finance of US$ 15
200 from local banks, contingent on provision of a business plan.
The company uses a current/checking account and loan facilities and has insurance. After start
up, Sigma SA applied successfully to local banks, under the same conditions, for US$ 240 000
in additional funding to grow the business. The company is part of a business group but does
not have access to external business or technical advice or support.
In the coming year, Sigma aims to consolidate its position in the local market (particularly in
disinfectants and the area of industrial consulting) and in the long term, it intends to develop its
regional operations, to grow working capital.
The Musical and Sports, Botswana (F)
Established in 2004, The Musical and Sports employs 2-5 people in a music shop selling CDs and
DVDs. The company sought government approval prior to setting up its business and this was
granted in the form of a license. The Musical and Sports started the business with a small
amount of capital, raised from personal savings, which was used to secure and fit out the
premises and to computerise the business, but which was insufficient to stock the shop and to
advertise.
After 12 months of operation, the company applied for 300 000 BWP from a local bank, which
stipulated evidence of a bank account, formal registration and a business plan in order to secure
the loan. The interests rates charged to SMEs are prime (i.e. 16%) plus 10% or 12%, dependent
on whether or not the company is a member of the bank’s business club. The Musical and Sports
is a member of the business club and the conditions imposed on the company by the bank were
as follows:
1 The bank needed detailed evidence of the company’s financial operations for at least 12
months i.e. annual financial reports; bank statements; daily cash deposits and proof that
the company account was not overdrawn.
2 The bank needed security for the loan amount; different banks impose different loan
repayment periods but these are generally 12-36 months.
3 The bank required a business plan, profile and trade references to process the loan
application. Incidentally, it takes more time now to process loans with computers than
when these were processed manually in the past, and the bank charges are often
prohibitively high, making banking one of the highest costs for an SME.
4 Further conditions are the provision of company registration documents, which in
Botswana include lists of company directors, contact details, residential addresses, and
details of whether the company owns properties or has accessed loans in other banks.
30
The company found that it is generally easier to obtain a personal loan (e.g. for a car or house)
than for a company to obtain a business loan, which would actually generate money rather than
consuming it. The Musical and Sports was only partially successful in meeting its funding
requirements, as the bank lent 40 000 BWP, which would not enable the company to buy
sufficient stock to build a vibrant business offering consumers adequate choice.
The Musical and Sports uses a current/checking account and loan facilities and is not insured. It
is a member of a support group for small businesses and has access to technical and business
advice from local companies and consultancies, for a fee. In the short term, the company
foresees limited progress as lack of funding is constraining its ability to purchase new stock and
compete with larger stores offering consumers greater choice and up to date material. The
company is licensed to sell music on the EMI, Sony-BMG and Gallo-Africa labels and if properly
funded, would be well positioned to lead the market. The company expressed frustration at the
lack of assistance from local banks in supporting small business development in Botswana.
Reference Consulting, Madagascar (G)
Established in 2005, Reference Consulting employs 11-20 people to provide consulting,

marketing and sales services to companies. It has not sought government approval to operate
and did not seek external start up finance. The company uses a current/checking account and is
insured.
After start up, Reference Consulting approached local banks, the African Development Bank
(ADB) and donors/international institutions for additional finance of US$ 50 000. The loans were
conditional on providing references, a business plan and evidence of access to business support;
Reference Consulting is currently waiting to receive confirmation that its applications have been
successful. The company does not belong to any business support groups or cooperatives but
has access to business development and technical support from the International Finance
Corporation (IFC), for a fee.
Reference Consulting requires short term funding to cover the costs of securing premises and
investing in new technology and to launch new products and services in the market.
Wave Sanitation, Botswana (H)
Established in 2000, Wave Sanitation employs 51-100 people in the environmental services
sector. The company sought government approval prior to setting up the business and this was
awarded in the form of a license and company registration. Wave Sanitation applied to local
banks for start up finance of US$ 2 million to supplement its own savings, but was successful in
raising only US$ 250 000. This was conditional upon a minimum turnover, formal registration,
credit history, evidence of a bank account, a business plan and collateral. In return, the bank took
an equity stake in the business.
The company uses a current/checking account and is insured. After start up, the company
approached local banks for further finance, subject to the same conditions, but was unsuccessful
in its application. Wave Sanitation is a member of a support group for small businesses and has
access to business development and technical advice and support from local companies and 31
donors/international institutions, for a fee.
The company requires US$ 1.5 million in order to consolidate its position and to expand. Wave
Sanitation has formed an alliance with another company but lacks the funding necessary to fulfil
its obligations in order to formalise the relationship. In the long term, the business intends to
expand internationally and to bring more companies into its value chain.
Menuiserie de la Grande Ile, Madagascar (I)
Established in 1999, Menuiserie de la Grande Ile employs 51-100 people in the manufacturing
sector. The company has not sought government approval to operate and did not seek external
start up finance. The company uses a current/checking account and is insured.
After start up, the company successfully applied for US$ 970 000 in additional funding from
local banks, which stipulated that Menuiserie de la Grande Ile provide a business plan and
collateral and in return, the bank would take an equity stake in the company. Menuiserie de la
Grande Ile is not a member of any business support groups or cooperative and has no access to
any external business development or technical advice or support.
In the coming year, the company expects to achieve a growth rate of 10% and in order to
finance the continued growth of the business it will need to secure a loan or other funding of
up to US$ 1 million. This will finance the building of a new factory and facilitate an increase in
working capital.
Bindenagel Consulting, South Africa (J)
Established in 2003, Bindenagel Consulting is a sole trader specialising in political-economic

strategy for commercial companies and NGOs, also covering HIV/AIDS and youth development
issues. The company sought government approval before setting up the business, which was
granted in the form of a permit. Bindenagel Consulting uses a current/checking account and is
insured.
The company did not seek external support to raise start up finance but supplemented its own
savings by successfully approaching local companies and MNCs. Rather than apply for a lump
sum, Bindenagel Consulting decided to apply for funding on a project-by-project basis. The
funding ranges from essentially nothing (to securitise educational loans), to 4 million ZAR for a
three-year soccer project and over 10 million ZAR for an agriculture project. This was contingent
on providing references, a business plan and evidence of a bank account. Bindenagel Consulting
is not a member of any business group or cooperative but the company has free access to
business development and technical advice from MNCs, NGOs and donors/international
institutions.
32
Over the coming year, Bindenagel Consulting will increase turnover substantially as a number of
prepared projects are now entering the funding-request stage where, with the aid of references
and the project business plans, they are expected to receive funding and to mature into
implementation. All require cooperation with other companies, some also with NGOs and
international donors. These informal alliances and references are well established but still require
negotiation for funding, in the region of up to 5 million ZAR per project. If successful, five or six
projects will come to fruition and the company will begin to achieve a greater financial turnover.
Over the next 5-10 years, the various projects will require continued alliances, as well as positive,
proven financial gain. This should enable projects worth up to 5 million ZAR to expand beyond
that figure, while the company expertise itself will grow in line. Bindenagel Consulting intends
to increase the number of employees only to a certain level, since it is a strategic operation, not
a maintenance business. This will enable the company to expand, primarily into the rest of Africa,
as well as into Latin America.
Presentation of data – Southern Africa
• 9 companies applied for additional finance
33
A Rent-A-Candle
B AT-DM
C Ingenojya
D Mad’Délices
E Sigma SA
F The Musical and Sports
G Reference Consulting
H Wave Sanitation
I Menuiserie de la Grande Ile
J Bindenagel Consulting
The graph excludes data for Wave Sanitation (H) as the finance applied for (US$ 2 million at start
up and, having raised only US$ 250 000, an additional US$ 1 750 000 subsequently) was
substantially greater than any other company. Representing this graphically would have skewed
the axes and rendered comparison between all other companies impossible.
This was also the case for Menuiserie de la Grande Ile (I), which did not access start up finance
but applied for US$ 970 000 in additional funding.
Finally, Bindenagel Consulting (J) has not been included on the graph as the company did not
access start up finance but did apply subsequently for funds on a project-by-project basis, which
is difficult to represent accurately on this graph.
• 5 of the 9 companies were successful in accessing additional finance

• 2 companies were unsuccessful
• 1 company was partly successful
• 1 company’s funding application is still being processed
• 6 companies belong to a business support group, cooperative or industry group
• 7 companies have access to business development / technical advice and support

from an external organisation, primarily from local companies but also (in
descending order of frequency), from donors/international institutions, NGOs,
MNCs and government.
• Of the 7 companies with access to support, 4 companies are required to pay a fee
for the service. This is not dependent on whether the source is public / private
sector.
34
I
I
J
J
35
F
F
E
E
C
B
C
B
Name of company
H
G
D
A
H
G
D
A
Local banks
Government
Local companies
MNCs
Own savings
ADB
Cooperative
No. of employees
Business plan
Bank account
Minimum turnover
Credit history
References
Equity

Formal registration
Business support
Collateral
Joint venture
Southern Africa
Appendix A
Glossary of terms and abbreviations
ADB – African Development Bank

BOCCIM – Botswana Confederation of Commerce, Industry and Manpower
BWP – Botswanan Pula
DfID – Department for International Development (UK)
DRC – Democratic Republic of Congo
EGP – Egyptian Pound
€ - Euro
FMG – Malagasy Franc
GHC – Ghanaian Cedi
IFC – International Finance Corporation
KES – Kenyan shilling
MNC – Multinational Corporation
NGO – Non-Governmental Organisation
PSFU – Private Sector Foundation Uganda
R&D – Research and Development
SME – Small and Medium sized Enterprise (see definition in introduction)
UGS – Ugandan shilling
UNIDO – United Nations Industrial Development Organisation
ZAR – South African Rand
Exchange rates
US$ 1 = 5.3 BWP

US$ 1 = 5.8 EGP
US$ 1 = 0.8 EUR
US$ 1 = 9050 FMG
US$ 1 = 9148 GHC
US$ 1 = 75 KES
US$ 1 = 1830 UGS
US$ 1 = 6.1 ZAR
36
Appendix B: Questionnaire
Questionnaire to SMEs – Rating Your Access to Finance
Name: _____________________________________________________________________
Company: _____________________________________________________________________
Address: _____________________________________________________________________
Email: _____________________________________________________________________
Telephone _____________________________________________________________________
Background information
1. In which year was your business established? ___________________________________
2. How many people are employed in your business?
1 (sole trader) 2-5

5-10 11-20
21-30 31-50
51-100
Other (please specify) _____________________________________________________________
3. In which industry do you operate?
Please tick one box and add any clarification necessary in the space provided below
Agriculture Manufacturing
Food & Beverages Construction
Utilities Education/Childcare
Sport Security
Property Travel
ICT Pharmaceuticals
Chemicals Engineering
Transport Health
Petroleum industry Commodities
Professional Services (e.g. coffee, tea, cocoa)
(e.g. Financial, legal) Media
Automobile (e.g. advertising, Printing, publishing, PR)
Other 37
Further clarification
_________________________________________________________________________________
Licensing
4. Did you seek government approval prior to establishing your business?
Before After Not at all
5. If yes, when did you obtain it and in what form was it granted
(e.g. licence / permit / business “passport”)?
_________________________________________________________________________________
Funding, financial and insurance services
6. Did you seek funding when setting up your business?
Yes No
7. If yes, who did you approach for funding?
You may tick more than one box
Local Banks African Development Bank Cooperative

Local Companies Philanthropic Foundations Friends/Family
Government Donor/International Own Savings
Institutions
Multinational
Corporations
Other (please specify)
_________________________________________________________________________________
38
8. How much funding did you seek?
Please specify currency ___________________________________________________________
If possible, please outline how much funding was secured from each source:
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
9. What were the criteria for obtaining this funding?
Number of employees Business Plan Bank Account

Minimum turnover Equity Business Support
Credit History Formal Registration Collateral
References
_________________________________________________________________________________
10. Does your business utilise the following financial services?
Current/checking account Credit card Loan

Savings account Overdraft
_________________________________________________________________________________
11. Are you insured?
Yes No
39
Developing and growing your business
12. Did you seek additional funding after the start up finance?
Yes No
13. If yes, much funding did you seek?
Please specify currency ___________________________________________________________
14. If yes, who did you approach for funding?
Local Banks African Development Bank Cooperative

Local Companies Philanthropic Foundations Friends/Family
Government Donor/International Own Savings
Institutions
Multinational
Corporations
Other (please specify)______________________________________________________________
15. What were the criteria for obtaining this funding?
Number of employees Business Plan Bank Account

Minimum turnover Equity Business Support
Credit History Formal Registration Collateral
References Joint venture with
Another company
Other (please specify)______________________________________________________________
16. Were you successful in raising additional funding?
Yes No
Business Support
17. Are you a member of the following groups?
Business cooperative Support group for small businesses

18. Do you have access to business / technical advice and support from the following
sources?
Local companies/consultancies Multinational companies

Government NGO
Donor/International institutions
19. If so, is there a fee for this support?
Yes No
20. How do you see your business developing over the short term (coming year)? For
example, what are your funding requirements, what would this cover, are you seeking alliances
with other companies?
41
21. How do you see your business developing over the longer term (5-10 years)?
For example, what are your funding requirements, what would this cover, are you seeking
alliances with other companies?
africapractice will hold your details and answers to this questionnaire on file for
research purposes. Please tick this box if you would prefer your name and contact
details NOT to be published in the resulting report to the Japanese External Trade
Organisation.

Thank you very much for your time; your assistance is greatly appreciated
Please return this questionnaire to: Natalie Maule

africapractice
67-69 Whitfield Street
London W1T 4HF
42

JETRO

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africapractice

Access to Finance: Profiles of African SMEs

An africapractice report prepared for

Premise of the report 2

Case Studies and Presentation of Data 6

Glossary of terms and abbreviations 36

africapractice was commissioned by the Japanese External Trade Organisation (JETRO) to

The study is formed of a compendium of practical examples of SME development, to

Criteria Micro-enterprise Small-sized Enterprise Medium-sized Enterprise

Max number of employees <10 <50 <250

Report Format and Methodology

The answers to the following questions are recorded as prose:

• What kind of business does the SME wish to develop?

The following answers are recorded graphically:

• What access to different sources of funding is available?

• UNIDO established a Cluster/Network Development Programme to provide access to

Case Studies - North Africa

Infoserve, Egypt (A)

Al-Hoda for Intellectual Property, Libya (B)

Wadizzir Investments, Libya (C)

Menaviacargo, Egypt (D)

Data Management Systems, Egypt (E)

Anonymous, Egypt (F)

Microtechnic International Tunisie, Tunisia (G)

Magic Solutions, Egypt (I)

Environmental Civil Engineering Consultancy Centre (Envirocivec), Egypt (J)

Presentation of data – North Africa

• 6 of the 10 companies are insured

• 3 companies applied for start up finance

Start up finance in US$ Additional finance in US$

• 2 companies sought additional funding. Both were successful

• 3 companies belong to business groups: Chambers of Commerce (Egyptian and

• 7 companies have access to business development and technical advice, primarily

Criteria to access the finance

Case studies – West Africa

3K&A Adventures, Ghana (A)

Zebra Aluminium, Ghana (B)

TIM Technology Services, Ghana (D)

a local bank and is also a member of an industry group, for a fee.

Pikof Ghana Ltd, Ghana (E)

Delta Unic, Ghana (F)

Ataful Polythene, Ghana (G)

Easiware Systems Ltd, Ghana (H)

Ashers Multimedia, Ghana (I)

Established in 1998, Eskay Therapeutics employs 51-100 people in the pharmaceutical

Presentation of data – West Africa

• 5 of the 10 companies are insured

• 7 companies applied for start up finance

• 9 of the 10 companies sought additional funding

• 7 of the 9 companies applying for additional finance were successful

• 7 companies have access to business development and technical advice, primarily

Criteria to access the finance

Case Studies – East Africa

Cellar Distributors Ltd, Kenya (A)

SkyNet Ltd, Uganda (B)

Alpha Technologies, Kenya (D)

Established in 2002, Alpha Technologies employs 6-10 people in the engineering/security

Tonnet Enterprises, Uganda (E)

Chico Travel Bureau, Uganda (F)

National Medical Stores, Uganda (G)

Morgenthau Stirling, Uganda (H)

Karen Assisted Retirement Home, Kenya (I)

Presentation of data – East Africa