Publication: Financial Sector Policy Note : Financing Small and Medium-Sized Businesses in Burkina Faso
Loading...
Date
2013-11
ISSN
Published
2013-11
Author(s)
Editor(s)
Abstract
As in other Sub-Saharan African countries, small and medium-sized enterprises (SMEs) represent the vast majority of firms operating in the private sector in Burkina Faso. Private sector-led growth is a major element of Burkina Faso's poverty reduction strategy, la strategie de croissance accelere et le developpement durable. Unfortunately, many characteristics of Burkina Faso's business environment, and of businesses themselves, make private sector-led growth a challenge. This financial sector policy note focuses on the market for credit and closely related financial services, how private banks are providing these services to SMEs, and recommendations that address problems they are having. This requires understanding the behavior of banks with respect to SME lending, particularly investment lending and related financial products like leasing, guarantees, microcredit, and subsidized credit funds. This policy note consists of a study and survey of commercial banks and two non-bank financial institutions (NBFIs) (Burkina Bail and Societe Financiere de Garantie Interbancaire du Burkina (SOFIGIB) focusing on lending to SMEs. It focuses on the supply side of the market. The survey and accompanying interviews took place during the summer of 2013. Twelve private banks and five NBFIs were asked to participate in the study and survey. The study references two additional surveys focused on SMEs: (1) the 2009 World Bank enterprise survey, and (2) the 2012 survey of SMEs commissioned by the ministry of industry, trade, and artisans. The study consists of observations and analysis of survey data to provide input to policies for encouraging lending to SMEs and increasing the provision of other financial services. This report is structured as follows: executive summary; purpose and structure of policy note; macroeconomic context and the banking sector section provides a description of the situation in which Burkina Faso finds itself. Demand for SME finance section presents recent studies focused on the demand for credit by SMEs. Supply of SME finance section presents the results of the survey organized around the keys issues facing the provision of credit to SMEs. Enabling environment for financing SMEs section discusses salient characteristics of the business, legal, and regulatory environment that effect SME finance; recommendations; and conclusions.
Link to Data Set
Citation
“Soubeiga, Sidiki; Strauss, Jeremy. 2013. Financial Sector Policy Note : Financing Small and Medium-Sized Businesses in Burkina Faso. © http://hdl.handle.net/10986/18696 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Uganda - Making Finance Work(Washington, DC, 2009-12)The objective of this report is to contribute to the continuing policy dialogue on financial sector development. It is intended that the analysis and recommendations from this report will contribute towards the preparation and implementation of the National Development Plan (NDP) and the implementation of the Financial Markets Development Plan. The report suggests both policy and institutional reforms to develop rural and agricultural finance. This report has two parts: improving access to financial services and improving the supply of term finance. The first part focuses on three areas: expanding access though the banking system; developing rural and agricultural finance; and improving payments and remittance systems. The second part focuses on three key areas: reforming the pension system; developing the housing finance market; and increasing the private financing of infrastructure. Each chapter has the following structure: the first section provides an overview of the chapter topic; the second presents an analysis of the results of the survey (where applicable) and interviews, and categorizes constraints; the third section provides recommendations to address the constraints.Publication Bank Financing to Small and Medium-Sized Enterprises (SMEs) in Colombia(World Bank, Washington, DC, 2008-01)The objective of this paper is to shed light on current trends and policy challenges in the financing of small- and medium-sized enterprises (SMEs) by banks in Colombia. The paper is motivated by the well-documented financing gap for SMEs, whose causes are complex and multi-dimensional. Based on data collection and interviews with the authorities, a representative sample of banks, and other relevant entities, the authors analyze the evolution and characteristics of this market in recent years. Bank financing to SMEs is becoming a strategic segment for Colombian credit institutions. The current business and risk management models for SME lending are still relatively underdeveloped, but greater sophistication is expected as the market matures. Important institutional and policy constraints to SME lending remain, but are not yet binding. In order to address these constraints before they "begin to bite", the authors identify and describe a potential policy reform agenda.Publication Colombia : Bank Financing to Small- and Medium-Sized Enterprises (SMEs) in Colombia(Washington, DC, 2007-12)Small-and Medium-Sized Enterprises (SMEs) represent an important part of the Colombian economy, although they are not well documented in official statistics. In particular, there does not exist sufficient periodic data as to their characteristics, evolution, or overall contribution to the economy - in most cases, SMEs tend to be bundled together with micro enterprises in official statistics. The true size of the market is understated due to informality. Lack of access to finance has been cited as an important problem in recent surveys. However, there are significant differences in perceptions as to the size and causes of the financing gap. While there is strong evidence to support its existence following the 1999 crisis, the significant growth of this market in recent years raises some questions as to whether such perceptions remain valid. One of the lessons of the last few years is that banks will expand SME lending on their own accord - in spite of the presence of important constraints - when they perceive the attractiveness of this market and have begun to saturate easier (in terms of business model) market segments such as corporate and consumer lending. However, in order to ensure the sustainable growth of this market, continued strong macroeconomic performance and a stable and consistent policy framework in the financial sector have been identified as important considerations.Publication Financing Small and Medium Enterprises in the Republic of South Africa(World Bank, Washington, DC, 2011)Numerous studies worldwide have highlighted the important contribution made by small and medium-sized enterprises (SMEs) to employment, income and economic growth. In a study of 76 developed and developing economies, Ayyagari and others (2007) found that SMEs account for more than 60 percent of total manufacturing employment and that SMEs contributed significant proportions of Gross Domestic Product (GDP). SME growth requires external financing, but constraints to accessing credit, consistently rated as some of the greatest barriers to the operation and growth of firms, affect SMEs more severely than large firms (Beck and Demirguc-Kunt 2006; Beck and others 2006). The purposes of this report are to: a) analyze the availability of bank finance to SMEs in South Africa and how availability might be enhanced in the context of the economic downturn; and b) offer concrete policy recommendations on how to lessen obstacles to bank SME financing and reduce the negative effects of the economic downturn (or of a similar downturn in future) on access to finance. The report is structured in 5 sections: section two provides a short overview of existing studies and data on SME finance in South Africa. Section three presents the main results of the surveys. Section four provides policy considerations. Section five concludes.Publication Republic of Moldova Enterprise Access to Finance : Background Note(Washington, DC, 2013-06)The Government of Moldova is seeking to change the country's development paradigm and build an export-oriented economy characterized by investment, innovation, and competitiveness, following a decade of 'jobless growth'. This report focuses on improvements that will be needed to move Moldova to the next stage of development as envisioned in the Moldova 2020 strategy; however, reforms over the past decade also deserve acknowledgment. Improving the business environment is an especially important task, given Moldova's low levels of natural resources and small internal market. This study aims to identify the most pressing problems in the business environment that are adversely affecting Moldovan companies' productivity and competitiveness, and to present recommendations that would help remove these obstacles. The analysis is based on a review of existing reports; interviews with government officials, private sector associations, a sample of businesses, and some subject matter experts; as well as original research on access to finance. This study has identified that the following aspects of doing business are the most problematic: customs administration; tax administration; business regulation, consisting of licenses, authorizations, permits, and inspections; the competition framework; and access to finance. This report presents short-term (2013-2014) and longer-term (2015-2017) recommendations in each of the five priority areas.
Users also downloaded
Showing related downloaded files
Publication Doing Business 2014 : Understanding Regulations for Small and Medium-Size Enterprises(Washington, DC: World Bank Group, 2013-10-28)Eleventh in a series of annual reports comparing business regulation in 185 economies, Doing Business 2014 measures regulations affecting 11 areas of everyday business activity: Starting a business, Dealing with construction permits, Getting electricity, Registering property, Getting credit, Protecting investors, Paying taxes, Trading across borders, Enforcing contracts, Closing a business, Employing workers. The report updates all indicators as of June 1, 2013, ranks economies on their overall “ease of doing business”, and analyzes reforms to business regulation – identifying which economies are strengthening their business environment the most. The Doing Business reports illustrate how reforms in business regulations are being used to analyze economic outcomes for domestic entrepreneurs and for the wider economy. Doing Business is a flagship product by the World Bank and IFC that garners worldwide attention on regulatory barriers to entrepreneurship. More than 60 economies use the Doing Business indicators to shape reform agendas and monitor improvements on the ground. In addition, the Doing Business data has generated over 870 articles in peer-reviewed academic journals since its inception.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication World Development Report 2011(World Bank, 2011)The 2011 World development report looks across disciplines and experiences drawn from around the world to offer some ideas and practical recommendations on how to move beyond conflict and fragility and secure development. The key messages are important for all countries-low, middle, and high income-as well as for regional and global institutions: first, institutional legitimacy is the key to stability. When state institutions do not adequately protect citizens, guard against corruption, or provide access to justice; when markets do not provide job opportunities; or when communities have lost social cohesion-the likelihood of violent conflict increases. Second, investing in citizen security, justice, and jobs is essential to reducing violence. But there are major structural gaps in our collective capabilities to support these areas. Third, confronting this challenge effectively means that institutions need to change. International agencies and partners from other countries must adapt procedures so they can respond with agility and speed, a longer-term perspective, and greater staying power. Fourth, need to adopt a layered approach. Some problems can be addressed at the country level, but others need to be addressed at a regional level, such as developing markets that integrate insecure areas and pooling resources for building capacity Fifth, in adopting these approaches, need to be aware that the global landscape is changing. Regional institutions and middle income countries are playing a larger role. This means should pay more attention to south-south and south-north exchanges, and to the recent transition experiences of middle income countries.Publication Remarks to the Annual Meetings 2020 Development Committee(World Bank, Washington, DC, 2020-10-16)David Malpass, President of the World Bank Group, announced that the Board approved a fast track approach to emergency health support programs that now covers 111 countries. Most projects are well advanced, with average disbursement upward of 40 percent. The goal is to take broad, fast action early. The operational framework presented back in June has positioned the Bank to help countries address immediate health threats and social and economic impacts and maintain our focus on long-term development. The Bank is making good progress toward the 15-month target of 160 billion dollars in surge financing. Much of it is for the poorest countries and will take the form of grants or low-rate, long-maturity loans. IFC, through the Global Health Platform, will be providing financing to vaccine manufacturers to foster expanded production of COVID-19 vaccines in both part 1 and 2 countries, providing production is reserved for emerging markets. The Development Committee holds a unique place in the international architecture. It is the only global forum in which the Governments of developed countries and the Governments of developing countries, creditor countries and borrower countries, come together to discuss development and the ‘net transfer of resources to developing countries.’ The current International Financial Architecture system is skewed in favor of the rich and creditor countries. It is important that all voices are heard, so Malpass urged the Ministers of developing countries to use their voice and speak their minds today. Malpass urged consideration of how we can build a new approach to debt restructuring that allows for a fair relationship and balance between creditors and debtors. This will be critical in restoring growth in developing countries; and helping reverse the inequality.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.