Small and Growing Businesses (SGBs) are crucial for economic growth, but often lack access to financing. Discover how Business Development Services (BDS) equip these enterprises with the tools and knowledge they need to thrive, fueling sustainable development and creating jobs.

Business Development Services: The Essential Bridge for Small and Growing Businesses

Small and Growing Businesses (SGBs) are the lifeblood of economic development, yet they often find themselves in the “missing middle” of financing – too large for microfinance, but too small or high-risk for traditional banking. Despite this challenge, SGBs are essential to achieving the Sustainable Development Goals (SDGs), particularly those related to gender equality, climate action, and economic growth. These enterprises create over 70% of jobs in developing countries and account for nearly 35% of GDP, according to the World Trade Organization.

The Financing Gap: A Persistent Challenge

A significant obstacle for SGBs is accessing the financing they need to thrive. The World Bank reports that small and medium-sized enterprises (SMEs) are less likely to secure bank loans than larger firms, often relying on personal savings or loans from family and friends to start and operate their businesses. The International Finance Corporation (IFC) estimates that the annual unmet financing need for 65 million formal micro, small, and medium enterprises (MSMEs) in developing countries is a staggering $5.2 trillion.

Several factors contribute to this funding gap. Many SGBs lack investment readiness, which includes having strong business plans, accurate financial records, and a clear understanding of their target market. Additionally, traditional lenders often require collateral and strict credit histories that SGBs may not have. The perceived risk associated with investing in smaller, less established businesses also deters potential investors.

Business Development Services: A Crucial Solution

Business Development Services (BDS) are a key tool for addressing this financing gap. BDS providers offer various services that equip SGBs with the skills and knowledge needed to attract investment, improve operations, and achieve sustainable growth. These services can include financial advisory, legal support, technical training, market research, and networking opportunities.

ANDE Members: Leading the Way

ANDE members are at the forefront of delivering BDS, providing SGBs in developing economies with business, educational, and financial support. Here are a few examples of their innovative approaches:

• GFA Consulting: Developed the Business Diagnostic Tool to help African SMEs meet investor and lender expectations, strengthening their investment readiness.
• Pangea Global Ventures: Launched the Catalyzing Investment in Small Business (CISB) initiative to connect investment-ready SMEs with impact investors, focusing on vital sectors like agribusiness, energy, and climate.
• The Center for International Private Enterprise (CIPE): Introduced the Ethics 1st Platform to support African businesses in standardizing practices, building strong governance, and attracting accountable investment.
• Aspire Coronation Trust Foundation: Established a Grant Cycle program to provide direct funding to SGBs and other key players in the entrepreneurship ecosystem.
• The African Management Institute (AMI): Developed practical learning programs to enhance individual performance and drive business results, resulting in significant revenue growth for participating businesses.
• FATE Foundation: Addresses funding challenges through research and advocacy, informing stakeholders about investment opportunities in Nigerian SGBs and shaping initiatives to empower entrepreneurs.
• Impact Investing Ghana (IIGH): Created the ESO Collaborative platform to connect SGBs with programs and resources that support their growth and development, with plans to launch a Pooled Fund to provide pre-seed support.

ANDE's Role: Strengthening the Ecosystem

ANDE plays a vital role in supporting BDS providers by fostering connections, knowledge-sharing, and capacity building. By strengthening this network, ANDE enhances the effectiveness of BDS initiatives, ultimately benefiting over 200,000 SGBs annually.

A Collective Effort for Sustainable Growth

Investing in SGBs through comprehensive and collaborative BDS initiatives not only drives sustainable economic development but also contributes to a more inclusive and resilient global economy. By addressing the financing gap and empowering SGBs, we can achieve a brighter future for all.

Author: Christine Anene

Collaborators: Em Ekong and Roger Santodomingo