On Tuesday, ADA held its 33rd Midi Microfinance event focusing on entrepreneurship development in the South.
Max Meyer, President of ADA, announced that the NGO would now focus part of its action in favour of small businesses, a major shift for an NGO which until then was directed to micro-entrepreneurs and specialised only in financial inclusion of individuals.
"The entrepreneurial spirit is more developed in the South than in Europe," explained Franck Renaudin of Entrepreneurs of the World. "It's for us to push" added Max Meyer, President of ADA, who wants to encourage the IMF to support and also promote the creation of SMEs.
After an expertise of over 20 years of microfinance activities, the Luxembourg NGO ADA wants to fill a missing link, the missing middle part, a forgotten part of microfinance, developing access to finance for developing countries to entrepreneurs wish to engage in the creation of very small businesses and small and medium enterprises (SMEs). Specifically, this new centre will provide technical support to assist microfinance institutions to target small businesses. This is a change of scale as microfinance loans are typically a few hundred euros. For small businesses, they now reach several thousand euros. Support will also be commercial, to help them prepare a business plan before the launch and ensure the sustainability of the activity.
ADA will offer the ability to find the funds to microfinance institutions to finance small businesses. Today, access to finance for SMEs is almost impossible for entrepreneurs. On the one hand, the amounts are too small for conventional banks and ultimately too large for microfinance institutions. Hence the importance of establishing a new action centre to compensate for this gap.
Providing this service is essential to the fight against poverty. It is in fact small businesses that create jobs. They represent an estimated 30% of all jobs. At a time when Africa is growing exponentially and becomes a new "China", at a time when starting a business is a goal for more and more people in Europe and Africa, the issue of entrepreneurship is more relevant than ever. In Luxembourg, where microfinance investment funds are several billion euros, the issue of SME financing in Africa, Asia or South America and its ROI is sure to also attract the interest of investors.
Photo by Luc Deflorenne, © ADA (L-R): Laura Foschi (ADA), Patrick Losch (ADA), Franck Renaudin (Entrepreneurs du monde)
