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Financial system in Africa excludes young entrepreneurs

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Senegal has benefitted from several projects funded by the African Development Bank. Image credit: Imani Bahati from Unsplash

Financial system in Africa excludes young entrepreneurs

The establishment of entrepreneurs and start-ups are key to ensure sustainable growth and development on the African continent. This is not happening today, mostly because there is a lack of funding.   

According to the Dr Akinwumi A. Adesina, President of the African Development Bank the structure of the current financial system does not allow young entrepreneurs to easily obtain the credit necessary to start up and grow their businesses,” says Adesina.

“This is why I am proposing that we hold an investment forum for young Africans in Dakar, Senegal, to discuss a mechanism to finance their businesses,” says Adesina.

Adesina visited Senegal two days ago where he was received by the Senegalese President Macky Sall. Sall supports the idea of an investment forum in Dakar.

Sall and Adesina commended a local organisation called the Delegation for Rapid Entrepreneurship for Women and Youth for the successful implementation of its projects, funded largely by the African Development Bank. The Bank has financed the organisation’s 16 projects, producing a range of food items including rice and other cereals, and creating jobs for more than 60,000 young people and women in various parts of Senegal.

At the meeting in Senegal, Adesina praised the role played by women. “Africa is developing because of the commitment of women who fight every day to feed their families. That is why, as soon as I took over the helm of the African Development Bank, I set up the Affirmative Finance Action for Women in Africa (AFAWA) program to mobilise USD5-billion to support women’s promotion and entrepreneurship projects.”

Bank’s funding has a big impact

Sall said that the African Development Bank’s funding of large projects are in line with Senegal’s development strategy. “The impact of these funded projects in Senegal is significant,” he said, mentioning the Regional Express Train launched last month.

Since beginning operations in Senegal in 1972, the African Development Bank has delivered 116 projects in the country worth more than USD3.47-billion.

Adesina said the African Development Bank was proud to contribute to Senegal’s development. Senegal has delivered major projects over the last few years in various sectors such as agriculture, social, energy and transport with flagship projects such as the modern Blaise Diagne International Airport, the Toll Road and now the Regional Express Train.

The Senegalese leader and Adesina agreed to hold a pan-African youth entrepreneurs’ forum to address the financial needs of Africa’s bulging youth population and rally support for the establishment of a youth investment bank.

The Bank head and his host discussed other key challenges facing Africa, including insecurity in parts of the continent, the rising levels of debt and the impact of the covid-19 pandemic, which has claimed lives and adversely affected business, resulting in lost jobs and livelihoods.

Global pandemic’s impact is severe

“The pandemic is having a devastating effect on our economies. It’s clear we need a financial mechanism to stabilise economies when faced with challenges such as covid19 pandemic. In Africa we are yet to develop affordable social support networks to keep businesses running and people in their jobs, the way America and countries in Europe did,” said President Sall.

The Senegalese leader said the current economic situation across the continent was compounded by a decline in foreign direct investment because of “an exaggerated perception that Africa carries a higher investment risk than other countries. That perception is also fed by international credit agencies that tend to unfairly lower the credit rating of African countries, simply out of a wrong perception that Africa is more dangerous than other regions in the world.”

On other issues, Adesina praised Senegal for setting an example in terms of providing people with access to clean water. He said this brings the country closer to universal access, with 98.8% and 94% targets reached in urban and rural areas, respectively. He reiterated the African Development Bank’s commitment to support Senegal’s preparations for the World Water Forum in March 2022.

On health, Adesina encouraged the Senegalese government to develop a new health policy. He emphasised the Bank’s commitment to support the country’s investment in the development of its pharmaceutical sector and the production of vaccines.

After meeting with the Senegalese leader, Adesina met with representatives of Senegal’s private sector.

Adesina said in Senegal 90% of the operations by the African Development Bank are mainly in the public sector and called on the private sector to work closely with the government through Public Private Partnership to accelerate development in the country.

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