“There is an urgent need for training in this area – it is critical to develop programmes and schemes that will assist in financing these supposedly risky, but extremely important, businesses in the economy.”

Aziakpono believes that key to improving economic efficiencies on the continent is the development of financial structures that stimulate the ‘middle-space’ in the economy. “On the one side, where traditional financial systems operate, the level of cost recovery is very high. At the other end, where the cost recovery is very low, one finds ‘survivalist’ enterprises that are not registered businesses with extremely high levels of risk and they can hardly be financed by any profit driven institution “

In between these two extremes is what Aziakpono refers to as the development finance niche – the ‘middle-space’ in an economy. “This space is populated by self-employed, salaried workers, micro- enterprises and small and medium scale businesses (typically called SMMEs)”

Aziakpono says that by working with industry bodies, academic institutions can design courses that provide the skills people need to develop schemes that can assist in providing finance to the poor and the SMMEs.

“There is a real need to develop financial vehicles that are specifically tailored to the African reality. However, it is not practical to have a purely academic solution. We need to engage with industry and learn from them.”

According to Aziakpono, one challenge for these financial schemes is to overcome the challenges of underdevelopment in the African environment. “Firstly, there is a lack of collateral due to poorly defined property rights. Most of the property and land in Africa is communally-owned. Therefore a very small percentage of people have the ability to offer their property as collateral for a loan. Furthermore, weak accounting standards throughout the continent pose a significant barrier to assessing the viability of a company as an investment opportunity. There is also the weak legal system which makes the enforcement of contracts difficult.

He says the significant income inequalities between the poor and wealthy populations in Africa not only limit the pool of savings available in many economies but also the number of individuals who have access to them. “Dealing with this inequality by improving access to finance for all levels of business is essential to the further development and growth of Africa.”

The USB will host an African Development Finance Stakeholder Engagement workshop for senior executives on 27 July. The aim of this first workshop is to engage and build relationships with key institutions and companies. Organisations interested to attend, can phone Norma Saayman at 021 918 4238.