Supporting SMEs with one-stop financial hub to enhance growth

The small and medium enterprise (SME) sector is dynamic and complex with varying and evolving needs. SMEs are not a homogenous group and all differ in size, maturity, economic performance and need. They require finance for expansion, productivity and growth.

Therefore, anyone designing any intervention be it financial or technical assistance needs to exercise flexibility and be able to tailor make or customise products and services being offered.

Despite there being many players in the SME support space, entrepreneurs still struggle to find the right package tailored to their growth journey. Different stages of SME growth often require different financiers, resulting in a system that is disjointed and difficult to navigate and a financial sector that is also very fragmented.

The disjointed financial services is a challenge for SMEs seeking to grow. They more often than not need to explore many financial service providers before they can find what they are looking for.

SMEs often go through multiple and tedious processes and are eventually rejected for not being the right fit. This subjects SME owners to a confusing and frustrating process as they keep getting bused from one investor to another because they don’t quite fit the criteria required and are not yet ready for the full commercial funding that is provided by banks.

As a result, many promising entrepreneurs fall through the cracks due to systemic inefficiencies.

To address this challenge, there is a need for a one-stop financial institution where entrepreneurs can get the exact kind of support they need without having to spend time and other resources shopping for investors who can take them on.

This would be a place where an entrepreneur could access technical assistance and early-stage financing, receive acceleration support, and continue to access tailored capital and responsive management as they grow—eventually becoming ready for full commercial funding.

The current landscape is difficult to navigate, underscoring the need for a more integrated and SME-responsive solution. A one-stop financial institution that is SME-friendly, able to cater to all kinds of entrepreneurs and understands their nuanced needs is required.

This should be an intermediary that can walk with SMEs through the five to seven years it takes to grow a bankable business, and that is able to provide tailored financial solutions for every entrepreneur, regardless of gender, background, or the complexity of their business.

These types of financial intermediaries are critical to address the gap that exists between the demand and supply side. Expecting banks that are on the supply side to take on more risk may not be appropriate.

Addressing the demand side from the SME by walking with them at all stages to get them to what a bank can take a risk on can be more than a seven-year journey which sometimes can go up to 10 years.

This requires an intermediary that is funded and built-for-purpose to stay with them for the long haul.

Relatedly, while there is an increasing number of service providers and initiatives that target SMEs, the landscape remains opaque and difficult to navigate especially for entrepreneurs who do not have time or resources to decode the system.

Improved coordination can help, but they rely on SMEs stitching together support themselves. What is missing is a central institution that internalizes these connections and offers entrepreneurs a coherent, evolving suite of products. In this way, ecosystem collaboration becomes a backbone for delivering truly seamless support.

This model complements existing commercial and technical assistance providers, helping SMEs become ready for traditional finance and creating a healthier pipeline for the entire ecosystem.

A purpose-built institution that integrates capital, capacity and continuity is not just a convenience but a prerequisite for unlocking the full potential of SMEs in Africa.

The author is the Chief Investment Officer at Grassroots Business Fund (GBF)