Access to finance for East Africa’s micro, small and medium-sized enterprises – what’s there to know

PRESS RELEASE: SITA launches two fresh reports and serves up sustainability solutions to textile and leather companies at Going4Green conference
July 7, 2021
Q&A: Meet Aida Tadesse, Founder of ethical fashion brand and beneficiary of SITA’s Mitreeki Fashion Incubator Programme
August 9, 2021

Evans Wesonga, Managing Director, Noblestride Capital | Soumyajit Kar, Programme Officer, International Trade Centre

Interactions with entrepreneurs and micro, small and medium-sized enterprise owners in East Africa have repeatedly indicated limited access to business advice, talent, markets and capital. These constraints are even higher for businesses owned by youth, women and people living outside of the metropolitan regions. Access to finance is probably the single most pervasive challenge facing East African businesses, including the lack of capacity to perform the required due diligence to evaluate the right financing options.

To address this, SITA developed a guide to help MSMEs in East Africa navigate the sea of financing options and the occasional storm therein. This guide can be consulted here.

As the guide says, the funding source chosen by each company will depend on various factors, including :

  • How much the business seeks ;
  • The growth stage of the business ;
  • Cash flow of the business ;
  • Management’s willingness to cede some ownership to investors.

Businesses need to access additional financing for a host of reasons and this will also significantly impact the type of investors the entrepreneur or business owner chooses to approach for possible funding. Below are some of the reasons that an entrepreneur might need to raise additional funding :

  • Working capital ( purchase of inventory ) ;
  • Business expansion ( any form of capital expenditure or growth funding ) ;
  • Business acquisitions ( e.g. acquiring a complementary business ) ;
  • Share acquisitions ( including management buy-ins and buy-outs ) ;
  • Replacement capital ( to buy out exiting shareholders ) ;
  • Refinancing of existing debt.

The guide lists potential investors operating in and / or investing in East Africa. Depending on their specific needs, the guide also helps businesses to identify the right type of financier and lays out the common requirements. While the list is thorough, it is not exhaustive. There could be other potential investors not covered in the guide that would be interested to partner with companies. It is always advisable to engage the services of a qualified transactions advisory firm to lead the fundraising process.

The guide includes COVID-19-related emergency funds that can be availed by companies in the agribusiness and light
manufacturing sectors. Every effort has been made to provide guidance on the investment criteria and application procedure required by the various financiers. The guide is a live document and will be updated regularly to include new financing partners and incorporate feedback from readers.

The guide is available on the website, on the in-text hyperlinks above. For any other information, contact Soumyajit Kar,

Image by Steve Buissinne from Pixabay 

Voices of SITA
Voices of SITA
This blog provides a window into the SITA project. Through stories from India, Ethiopia, Kenya, Rwanda, Uganda and the United Republic of Tanzania, this blog showcases the project’s progress and impact.