Q&A: OPIC Africa MD discusses the challenges faced by SMEs

Worku Gachou, Managing Director for Africa at OPIC


Last year, the Overseas Private Investment Corporation (OPIC) launched Connect Africa, an initiative to invest in projects that will foster economic growth and better connectivity with global economies. OPIC, the U.S. Government’s development finance institution, provides financing and insurance to help businesses invest in emerging markets, and has more than $6 billion invested in Africa.

Here Worku Gachou, Managing Director for Africa at OPIC, discusses the challenges entrepreneurs and small businesses often face in Africa and the ways OPIC supports them.

What are some of the biggest challenges entrepreneurs face doing business on the continent?

One of the biggest challenges is accessing finance. Many commercial banks will only lend to larger corporations, so entrepreneurs and small and medium enterprises have long struggled to access loans to start or grow a business. SMEs account for 80% of Africa’s workforce, so their success is critical to Africa’s economic growth.

How is Connect Africa helping address these challenges?

OPIC has a long history of providing financing and insurance to support investment in development in Africa and our Connect Africa initiative will focus investment in sectors that are key to Africa’s future. Connect Africa is a $1 billion commitment focused on three sectors: the ICT space [Information and Communication Technology], value chains, and transport and logistics.

For the ICT space, for example, we’re looking at how to increase mobile and internet connectivity. Research shows that when people are more connected, the tangible benefits for the communities are significant, so we try to support mobile network operators, internet service providers, telecom infrastructure companies, and entrepreneurs who are using innovation and technology to address connectivity. We provided financing to Africell to help expand mobile connectivity in The Gambia, Sierra Leone, Uganda and the Democratic Republic of the Congo.

What are some of the other businesses that OPIC has supported?

Twiga is a food distribution company in Kenya that uses a mobile platform to strengthen agriculture value chains and connect small farmers to local food buyers. Small farmers often have trouble connecting with buyers and Twiga’s platform helps ensure that farmers will be able to sell their harvests before they spoil, and increases their earnings potential.

What advice would you give to entrepreneurs investing in Africa?

Patience is key. Things take a little bit longer and unexpected hurdles may arise. It’s also important to understand the local market and know how your venture will create value for consumers.

OPIC is in the process of transforming into the U.S. Development Finance Corporation (DFC). What will that mean for investment in Africa?

The new agency will have more tools and more resources to invest. The new DFC will have an investment cap that is more than double OPIC’s current threshold, and it will have a strong focus on investing in lower-income countries to promote inclusive economic growth.

Learn more at www.opic.gov