ABSA REGIONAL OPERATIONS: Africa’s Big Breakthrough is in Small Business

By Saviour Chibiya, Chief Executive for Absa Regional Operations

In October 2020, a partnership between Absa and the Mastercard Foundation set out to redefine the role of small businesses in Ghana’s economic transformation. At the heart of this initiative – the Absa Young Africa Works project – was a bold ambition: to create thousands of jobs by 2025. It was a deliberate investment in the country’s entrepreneurial ecosystem, positioning small- and medium-sized enterprises (SMEs) as engines of empowerment and economic resilience.

Since its inception, the project has trained over 6,700 SMEs in entrepreneurship, financial management, and digital tools, equipping them to attract investment and scale their operations. It has delivered US$100 million in subsidised loans to more than 6,000 businesses, prioritising women- and youth-led enterprises in sectors like agribusiness and fintech. By mid-2024, these efforts had created nearly 25,000 jobs and facilitated an investment of GHS1.1 billion in 6,296 SMEs.

The Absa Young Africa Works project is a case study in what can happen when financial institutions step beyond traditional banking to become enablers of inclusive growth. Similar initiatives by the bank are underway across the continent, providing trade finance, working capital, tailored lending solutions, innovative banking services, access to markets, and business development programmes in countries like Zambia, Botswana, Tanzania, Kenya, Uganda, and South Africa.

This focus on SMEs is not incidental – it is imperative.

Across sub-Saharan Africa, SMEs represent over 90% of all registered businesses and contribute approximately 50% to the region’s total GDP, according to the African Union. They are the critical interface where macroeconomic policy meets grassroots impact, serving as nodes through which economic opportunities are decentralised, wealth is redistributed, and innovation is catalysed at scale.

But their significance also lies in their potential to stabilise Africa’s economies. According to the International Labor Organization, nearly 83% of employment in Africa and 85% in Sub-Saharan Africa is informal, absorbing many of the continent’s young employment seekers – an informality that also, however, complicates financial inclusion and exacerbates inequality. SMEs, when nurtured, represent the bridge between informal survivalist activities and structured economic participation which has the potential to create a ripple effect of socioeconomic transformation uniquely positioned to leverage Africa’s inherent comparative advantages.

Providing support, however, is not the only means of fostering an environment for more SMEs to emerge. While Africa is home to countless entrepreneurs innovating across sectors, many start businesses out of necessity rather than opportunity, driven by the lack of access to formal employment. The challenge, therefore, is not only to create more small businesses but to enable the existing ones to scale. Africa needs its SMEs to evolve into larger enterprises capable of generating high-value jobs, integrating into global markets, and fostering a multiplier effect across industries.

To achieve this, financial institutions must rethink their role in empowering African SMEs – not as lenders or service providers, but as strategic enablers of economic transformation. A deliberate shift is then needed toward designing solutions that address the financial and non-financial barriers SMEs face, while recognising that these businesses are not at all monolithic.

Absa, for example, combines tailored financial solutions with capacity-building programmes, access to digital platforms, market-linkage initiatives, and advisory services that help SMEs across Africa start up or scale their operations – a multi-dimensional approach that aligns capital with capability.

“SMEs, when nurtured, represent the bridge between informal survivalist activities and structured economic participation”

The end goal is not simply the growth of individual enterprises but the development of interconnected ecosystems that catalyse structural change across industries and borders.

Consider the potential of SMEs in agribusiness or renewable energy. Their success often hinges on their ability to integrate into supply chains, access new markets, or adopt innovative technologies. A bank that understands this doesn’t just offer capital – it works to create the conditions in which that capital becomes catalytic. This might mean enabling partnerships with logistics providers to ensure products reach global markets, or working alongside governments to streamline cross-border trade processes under initiatives like the African Continental Free Trade Area (AfCFTA). Whether through digital platforms that link SMEs to buyers or regional forums that bring together entrepreneurs across industries, the focus would be on building the relational infrastructure that underpins successful ecosystems.

At the same time, banks should embed knowledge and capacity-building into their strategies. This means equipping SMEs with the tools to innovate and compete. For example, through SME hubs or innovation centres, banks can provide training in export readiness, access to intellectual property expertise, or support in adopting sustainable business practices. These hubs can also foster collaboration between SMEs, enabling them to co-create solutions and share resources.

But banks cannot build these ecosystems in isolation – they must work alongside governments, development finance institutions, and private sector actors to align incentives and resources. Public-private partnerships (PPPs) are particularly effective in sectors like renewable energy or infrastructure, where large-scale projects require both public oversight and private capital. By acting as intermediaries, banks can bridge the gap between policy objectives and market realities, ensuring that SME development is both inclusive and commercially viable.

One should also consider that these ecosystems are dynamic, shaped by changing market conditions, technological advancements, and shifting consumer demands. Banks will need to design interventions that evolve alongside these realities, as the tools and support mechanisms that African SMEs need today may differ entirely from those required tomorrow.

What emerges from this approach is not only the success of individual businesses but the strengthening of industries, the acceleration of innovation, and the creation of resilient economies that transcend borders.

For African banks, this is not a deviation from their purpose – it is an expansion of it, aligning their operations with the broader goal of sustainable, inclusive growth across the continent.

Content sponsored by Absa Regional Operations