Fintech Solutions for West African SMEs: Post-Crisis Challenges

Abstract

Catalysts of economic growth worldwide, small and medium enterprises (SMEs) play a pivotal role in fostering job creation, social advancement, and innovation. In Africa, they account for 95% of job providers (World Trade Organization, 2022). Yet, SMEs often face significant hurdles, with limited access to finance being chief among them, especially in the aftermath of financial crises. Traditional banks, hampered by regulatory changes, have scaled back lending to SMEs, paving the way for Financial Technology (Fintech) firms to offer innovative financing solutions. Utilizing cutting-edge technology and varied business models, Fintech platforms provide SMEs with alternative financing options, including debt and equity financing. This disruption in the financial landscape holds promise for SMEs, liberating them from reliance on traditional banking channels and providing crucial capital for growth and expansion. SMEs can significantly contribute to achieving Sustainable Development Goals (SDGs), such as creating employment, reducing income inequality, and alleviating poverty (OECD, 2017).

The post-crisis era has not only hindered traditional financing avenues but also birthed new alternatives. These non-bank financing options empower SMEs by presenting fresh funding opportunities. While Fintech companies are thriving in developed nations, many developing countries are lagging. Despite the numerous benefits Fintech financing offers to SMEs, certain countries are slow to adopt them, hindering progress