Ecobank And British International Investment To Boost Sierra Leone Smes

British International Investment BII, the UK governments development finance institution, has announced a 25m risk sharing facility with Ecobank Sierra Leone, in a move designed to help the lender commit significantly more capital to small and medium-sized enterprises SMEs and, in turn, promote stronger economic growth in the West African country.

SMEs provide employment to around 70 of the Sierra Leonean population but have traditionally struggled to access the capital needed for investment and growth. This is partly because banks in the region perceive SMEs in the country to pose an unacceptably high level of risk.

Sebastian Ashong-Katai, managing director of Ecobank Sierra Leone, tells African Business that what traditional bankers have tended to do to manage the risk is just ask for as much collateral as they can and this is where you find many SMEs struggling.

SMEs also have technical challenges meeting requirements imposed by the banks, such as around bookkeeping and how they organise their business, he adds, which further complicates their efforts to access much-needed capital.

While this has been a problem for SMEs in Sierra Leone for many years, Ashong-Katai notes that it has been particularly difficult recently. Prompted by the outbreak of the Covid-19 pandemic in 2020 and all the economic turbulence that followed, many African countries have struggled with depreciating currencies, high levels of inflation, and elevated interest rates, making it even trickier and costlier to borrow and invest.