Nigerian investment firm Cascador has teamed up with Sterling Bank to launch a $200 million financing facility aimed at small and medium enterprises. The initiative is designed to address a critical credit access gap that has long constrained the growth and potential of a major pillar of African commerce.
Small and medium enterprises make up more than 90 percent of all African businesses. These enterprises account for more than half of the gross domestic product in most countries across the continent and provide the vast majority of employment. However, a staggering $331 billion SME financing gap persists. Despite serving as the backbone of local economies, many African entrepreneurs struggle to secure the necessary capital to invest in production and generate sustainable revenue growth.
Recent research published by Cascador highlights the depth of the banking deficit. The study found that only 22 percent of businesses in sub-Saharan Africa hold a bank loan or a line of credit. That figure stands well below the global average, where 36 percent of businesses maintain similar access to traditional banking facilities.
To help bridge this divide, the new funding facility established by Cascador and Sterling Bank will offer loans of up to $1 million per individual business. The partnership aims to provide growing enterprises with access to larger and longer-tenor capital, enabling them to expand operations and navigate the financial hurdles common in the regional market.
