Entrepreneurial efforts get a boost from microfinanciers

In partnership with the International Finance Corporation, the Banque Gabonaise de Développement (BGD) launched a “Toolkit for Small and Medium-Sized Enterprises (SMEs)” in November 2013. The toolkit has an informational website for SME entrepreneurs with sections addressing all areas of business establishment, management and growth. The project also involves trainings for 500 SMEs, to be conducted in the next two years. Estimates for the number of SMEs in Gabon vary, but Alain Rempanot Mepiat, general manager of the Chamber of Commerce, Agriculture, Mining, Industry and Crafts of Gabon, told OBG, “According to the General Directorate for SMEs, there are some 55,000 SMEs in existence, but only 15,000 are active.”

One reason for the differing figures is fraud, as many enterprises are mechanisms for money laundering. Another reason, Rempanot Mepiat told OBG, is the informality of the sector. “Often the founder of an SME is not necessarily a businessman, but simply a practitioner of a particular trade who is inexperienced at running and marketing the business,” he said.

Credit

Accessing credit is perhaps the biggest challenge. “Some Gabonese SMEs lack the capital that would allow them to compete against international companies,” Alexis Ndouna, CEO at Nao Group, told OBG. Due to the risks involved, banks – often dependent on short-term deposits – are reluctant to lend to SMEs, particularly in light of higher returns on short-term sovereign bonds. Large foreign firms generally bring their financing with them, depriving Gabonese banks of lower-risk lending opportunities which would afford them more flexibility to work with SMEs.

Part of the SME Toolkit project aims to address this by working with banks directly to develop an SME profile to better analyse and assess potential SME borrowers. The project also focuses on building the capacities of SMEs to formulate their requests for credit in ways that meet the needs and concerns of the banks. In July 2014, the French Development Agency (Agence Française de Développement, AFD) signed an ARIZ agreement with Banque Gabonaise et Française Internationale (BICIG) to guarantee BICIG’s investment loans to Gabonese SMEs to up to 50% of loan value, substantially reducing the risk. Microfinancing initiatives are also flourishing. Francis Thierry Tiwinot, the executive director of statistics at the Ministry of Economy and Planning, told OBG, “In the next few years microfinance will be much more developed and these institutions will have a greater role to play in supporting SME growth.”

Markets

Key sectors targeted under the programme are forestry, mining, oil and gas, construction and manufacturing, particularly processing of timber and metals, as well as public works and services. SMEs often have a hard time accessing both the state market and the extractive industries logistics market due to a lack of technical specialisation or limited entrepreneurial sophistication. To help SMEs access the subcontracting market, the World Bank has established a scholarship programme to pair smaller firms with large, direct subcontractors for capacity-building collaboration. “Opportunities for SMEs in the domestic market are numerous, and with additional capacity building and financing, there is great potential for a strong SME role in the domestic economy,” Rick Emery Tsouck Ibounde, principal economist at the World Bank, told OBG.

Support

The government has also taken a number of steps to facilitate SME growth, including reorganising the Chamber of Commerce in 2010 to better serve business’ interests, reducing some of the administrative hurdles and time required for starting a business, and cutting the corporate tax rate from 35% to 30%. In February 2014, the government created the High Council for Investment to promote private sector growth and improve the business climate, and plans are under way to establish a much-needed commercial court specialising in business matters involving SMEs. A separate World Bank project, funded via a €13.4m loan from the International Bank for Reconstruction and Development, will establish a one-stop shop for new businesses, with a focus on youth and women entrepreneurs.