By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Lifestyle UgandaLifestyle UgandaLifestyle Uganda
  • Home
  • News
    • International News & Politics
    • Education
    • Sports
    • Money & Finance
    • Mobile and Telecommunication
    News
    Get breaking news, music updates, and celebrity stories from Uganda and East Africa. Stay informed with Lifestyle Uganda—your insider source for real-time industry updates.
    Show More
    Top News
    Lycamobile Uganda data bundles and voice (1)
    Lycamobile Uganda: 4 Most Frequently Asked Questions & Answers
    4th April 2025
    Who is John Blaq: Biography, Profile and Life Story of Kashada John
    Who is John Blaq: Biography, Profile and Life Story of Kashada John
    5th October 2023
    Maro, Maurice Kirya Help German singer Mark Forster Cross Over With “Chip In”
    17th November 2018
    Latest News
    Millions to renew expired national IDs as Uganda begins mass exercise
    6th May 2025
    Ugandan Scientist Dr Matthias Magoola Honoured with African Excellence Award
    5th May 2025
    Francis Nyende appointed Marketing Manager at Uganda Tourism Board
    5th May 2025
    Cheptoyek and Kibet shine for Uganda with standout victories in Tokyo
    4th May 2025
  • Business
  • Entertainment
    • Music
    • Celebrity
    • Biography
    • Lifestyle
      • Fitness
      • Pop Culture
      • Travel/Culture
    Entertainment
    Stay up-to-date with Lifestyle Uganda Entertainment—the latest news, celebrity gossip, films, and TV shows from Uganda, Nigeria, Kenya, and South Africa.
    Show More
    Top News
    Lycamobile Uganda data bundles and voice (1)
    Lycamobile Uganda: 4 Most Frequently Asked Questions & Answers
    4th April 2025
    Who is John Blaq: Biography, Profile and Life Story of Kashada John
    Who is John Blaq: Biography, Profile and Life Story of Kashada John
    5th October 2023
    Maro, Maurice Kirya Help German singer Mark Forster Cross Over With “Chip In”
    17th November 2018
    Latest News
    Media Personality Alfa Timez Joins Next Media After Three Years at Galaxy FM
    8th May 2025
    Robin Kisti video sparks questions after apparent arrest in Kampala
    8th May 2025
    Shazam Launches Viral Charts to Track the World’s Fastest-Rising Songs
    7th May 2025
    Dax Vibez expecting third child as concert preparations gather pace
    6th May 2025
  • Fashion
    • Beauty Trends
    • Accessories
    • Hair
    • Lipstick
    • Makeup
    • Skincare
    FashionShow More
    African designers to feature at top fashion weeks in Paris and Tokyo.
    African Designers to Take Global Stage with Afreximbank-Backed Fashion Showcases in Paris and Tokyo
    7th May 2025
    Dax Vibez lands fashion deal ahead of debut concert
    Joystar Fashion Partners with Dax Vibez in Boost for Kampala Star’s First Headline Show
    23rd April 2025
    Monochrome, but Never Mundane: How Judith Heard Makes Minimalism Feel Majestic
    19th April 2025
    Sheilah Gashumba’s Bold Twist on Schoolgirl Style Is a Lesson in Confidence
    17th April 2025
    Judith Heard Celebrates Birthday After Honoring Twin Daughters’ Milestone
    14th March 2025
  • Health & Living
  • Tips & Advice
Search
© 2023 Lifestyle Uganda. All Rights Reserved.
Reading: Facts About The Opportunity Cost Of Doing Business For SMEs In Africa That Will Blow Your Mind
Share
Sign In
Notification Show More
Font ResizerAa
Lifestyle UgandaLifestyle Uganda
Font ResizerAa
  • Home
  • News
  • Business
  • Entertainment
  • Health & Living
Search
  • Home
  • News
    • International News & Politics
    • Education
    • Sports
    • Money & Finance
    • Mobile and Telecommunication
  • Business
  • Entertainment
    • Music
    • Celebrity
    • Biography
    • Lifestyle
  • Fashion
    • Beauty Trends
    • Accessories
    • Hair
    • Lipstick
    • Makeup
    • Skincare
  • Health & Living
  • Tips & Advice
Have an existing account? Sign In
Follow US
© 2023 Lifestyle Uganda. A Now & Entertainment Media Company. All Rights Reserved.
Lifestyle Uganda > Blog > Business > Facts About The Opportunity Cost Of Doing Business For SMEs In Africa That Will Blow Your Mind
BusinessNews

Facts About The Opportunity Cost Of Doing Business For SMEs In Africa That Will Blow Your Mind

Josephine Wawira
Last updated: 6th December 2018 12:22 pm
By
Josephine Wawira
ByJosephine Wawira
A Communications Officer at Sustainable Inclusive Business Kenya, with over 6 years of progressive writing and broadcast experience. Mobile: +254 710374677 / +254 784130225
Follow:
Share
6 Min Read
The Opportunity Cost Of Doing Business For SMEs In Africa
The Opportunity Cost Of Doing Business For SMEs In Africa. File Photo
SHARE
The Opportunity Cost Of Doing Business For SMEs In Africa
The Opportunity Cost Of Doing Business For SMEs In Africa. File Photo

SMEs In Africa – Over the years, the African economy has gained momentum with an estimated 3.8 per cent increase in real output growth in 2017.

According to the African Development Bank, as the largest economies gradually strengthen, the performance of 2018/2019 should reach 4.1 percent.

Small and Medium – sized Enterprises (SMEs) made a major contribution to this economic growth and sustainable development.

In Kenya for instance, SMEs contribute approximately 40% to the GDP and employ over half of the country’s workforce.

Yet, becoming a profitable SME in the continent is never a smooth sail for many. There’s the presence of stringent government regulations in several countries, though the flexibility of doing business in others is a force to be reckoned with.

- Advertisement -

The World Bank has recognized Kenya as having implemented the most reforms in the region between June 2016 and June 2017.

These include the reduction of the number of procedures required to register a business, as well as utilizing a single window system to reduce the time for import documentary compliance.

Then there’s the implementation of iTax, an online platform that allows Kenyans to easily register their businesses, fill and pay corporate income tax among others.

Moreover, access to credit remains one of the biggest hindrances for SMEs in Africa to thrive. The major banks are mainly huddled in big cities, making it difficult for a predominant section of businesses in the rural areas to access formal financial services.

Besides, there exists rigorous risk assessment requirements by financial institutions that tend to limit the number of businesses that can access credit.

- Advertisement -

These requirements include but are not limited to collateral, which often proves cumbersome to acquire even when trying to access short term credit or simply, is non-existent.

According to Juan Seco, the Chief Operating Officer of JumiaPay, “Non-collateral loans are on the other hand quite expensive for most SMEs in Africa, with an Annual Percentage Rate (APR) that can go as high as 300% in Kenya and 240% in Nigeria.”

The Central Bank of Nigeria records about 69 percent of SMEs who wanted to apply for loans but failed, due to fear of application rejection related to collateral requirements and other associated conditions attached to the loan approval processes such as bad scores.

- Advertisement -

Notably, the entry of Fintechs (Financial Technology) companies into the banking market in Africa, is gradually improving the process of accessing credit for SMEs.

Jumia is one of the companies revolutionizing the sector with its Jumia Lending service, an initiative that provides working capital financing for short-term borrowers.

These are vendors selling on the online ecommerce platform for at least six months, seeking to expand and grow their online business.

The program aims at boosting financial inclusion in the continent, not only by providing sellers with an online visibility and a vast customer base; but also, with access to affordable working capital to boost their commerce.

Juan Seco notes that,

We understand the challenges faced by our vendors and SMEs in Africa, to access working capital financing. We have therefore, also partnered with some of the best institutions where we try to bridge the gap for sellers seeking long term credit facilities. With Jumia being in the middle, our lending partners have the security that the data of our sellers on Jumia, such as sales or customer ratings is accurate. In addition, we give them first lien on the sales on Jumia, so even though these are not collateralized loans, they are highly de-risked as we give them some control over the sellers’ cash flows. For our sellers, we understand they cannot afford to spend hours in
traffic and at the branch, so we digitize the onboarding process, so they can keep running their shops and not lose valuable income.

Currently applicable in Kenya and Nigeria, and soon to be launched in other countries where Jumia has operations, the Lending Program involves a quick online registration process with feedback provided within 72 hours.

Vendor applicants benefit from low interest rates of as low as 12% per annum, on the non-collateral loans with flexible repayment plans of between 1- 6 months.

Nauri Mwei, a vendor on Jumia said;

I am on the second loan and the process of paying back is quite efficient and flexible since you get to plan your installment deposits and manage it by yourself. I have managed to grow my business capital and gotten higher returns. When I lost funds and communicated the same to the lending team, they gave me a grace period to recover; a benefit that is not available on other lending facilities.

The impression FinTechs such as Jumia Lending are leaving on credit consumers and especially SMEs in Africa, is that of value add to their businesses.

They are bridging a long existing gap in financial inclusion in relations to credit access, by providing a more transparent and seamless way of availing financial services to a wider range of consumers in the continent.

Myanmar Issues an Order to Internet Providers to Block Twitter and Instagram
Janzi Awards 2021 Winners: The Complete List
UMA Presidency: Bebe Cool Says Cindy Sanyu Is a Better Choice to Lead the Association
What Does It Mean When Your Toes Start Turning Black?
Uganda Takes Action Against Gorilla Permits Fraud
TAGGED:Business For SMEs In Africachallenges faced by smes in africafunding smes in africaimportance of smes in africajumia travelperformance of smes in africasmes africa statisticssmes and economic growth in africasmes challenges in africasmes in africa 2017smes in africa pdfsmes in east africa pdfsmes in south africa pdf

Sign Up For Daily Newsletter

Be keep up! Get the latest breaking news delivered straight to your inbox.
I have read and agree to the terms & conditions
By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
Share This Article
Facebook Whatsapp Whatsapp Reddit Email Copy Link
Share
ByJosephine Wawira
Follow:
A Communications Officer at Sustainable Inclusive Business Kenya, with over 6 years of progressive writing and broadcast experience. Mobile: +254 710374677 / +254 784130225
Previous Article Nigerian Singer Maleek Berry to perform at the Blankets and Wine 2018 Blankets and Wine 2018: Nigerian Singer Maleek Berry to perform at December edition
Next Article See Photos at Jose Chameleone 2018 Legend Saba Saba concert on Lifestyleug.com PHOTOS: Huge Turnout at Jose Chameleone 2018 Legend Saba Saba concert

Stay Connected

45.2kFollowersLike
5.1kFollowersFollow
213FollowersPin
35.6kFollowersFollow
11kSubscribersSubscribe
400FollowersFollow
- Advertisement -

Latest News

Microsoft Africa Chief Urges Continent to Seize ‘AI Moment’.
Microsoft’s Catherine Muraga Calls on Africa to Lead, Not Follow, in AI Revolution
Technology & Science
8th May 2025
Wendi mobile wallet hits one million users.
Wendi Mobile Wallet Surpasses One Million Users as PostBank Pushes for Greater Financial Inclusion
Business
8th May 2025
David Wandera appointed as new Managing Director of Absa Bank Uganda.
David Wandera appointed as Absa Bank Uganda’s first Ugandan Managing Director
Business
8th May 2025
Alfa Timez signs with Next Media.
Media Personality Alfa Timez Joins Next Media After Three Years at Galaxy FM
Entertainment
8th May 2025
//

At Lifestyle Uganda, we inform, entertain, and inspire action through the content we create — empowering you to live a celebrity life.

Quick Link

  • Home
  • News
  • Business
  • Entertainment
  • Health & Living

Top Categories

  • About Us
  • Send a Tip
  • Terms of Use
  • Privacy Policy
  • Contact

Sign Up for Our Newsletter

Subscribe to our newsletter to get our newest articles instantly!

I have read and agree to the terms & conditions
Lifestyle UgandaLifestyle Uganda
Follow US
© 2025 Lifestyle Uganda. A Now & Entertainment Media Company. All Rights Reserved.
Join Us!
Subscribe to our newsletter and never miss our latest news, podcasts etc..
I have read and agree to the terms & conditions
Zero spam, Unsubscribe at any time.
adbanner
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?

Not a member? Sign Up