Impact of supporting SMEs

In March, SF's long-term partner GroFin published their 2015 in-depth impact report. Based on independent analysis, the report highlights GroFin’s socio-economic impact from supporting 500+ Small and Medium Enterprises (SMEs) in Africa and the Middle East over the past 12 years.

The report, estimates $469million of economic value is generated each year from SMEs supported by GroFin. This is equivalent to almost 60% of the GDP  generated by Uganda’s tourism industry in 2015.

By providing SMEs with a blend of financial and business support, GroFin has created 12,000 jobs and sustained 62,450 jobs – more than Google’s global workforce of 57,100.  What’s more 62% of the jobs were filled by low and semi-skilled workers.

“Insights from the report have informed our investment strategy” said Jurie Willemse CEO of GroFin. “Going forward we will focus on supporting SMEs working in vital needs sectors such as healthcare, energy and education where we believe market-supported entrepreneurial activity is particularly strong and impactful.”

In OECD countries SMEs contribute almost half of annual growth – and more than two thirds of employment in the manufacturing sector. By contrast, entrepreneurs who seek to start and grow businesses in emerging markets are woefully under-served, with the SME sector in some parts of Africa contributing less than 29% to annual GDP. 
Most banks are unwilling to provide finance to entrepreneurs without a proven track record or collateral; as a result only 20% of SMEs in sub-Saharan Africa have access to a line of credit from a financial institution.

Since 2004 GroFin has been supporting start-ups and growing businesses to expand their operations, purchase new assets or develop new product lines based on the viability of their growth plans, rather than the availability of collateral. This report demonstrates that GroFin’s approach of providing risk finance (of between $250k and $1.5million) alongside intensive business support, can spur job creation and drive large socio-economic impact. 
Investing in small and growing businesses will always be risky, and traditionally failure rates are between 70-90 % But GroFin-supported SMEs have experienced an 81% success rate. The key difference being GroFin has a specialist team that understands how to effectively 
 


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