SMEs remain heavily dependent on domestic resources and bank debt for financing, limiting entry into new markets, long-term investment, expansion and innovation. Cross-analysis by two fund managers who overcome these obstacles for the benefit of African SMEs: J-P Fourni, from Metier, and Lucas Franck, from Ascent Capital.

Interviewed by the teams of Proparco, a subsidiary of the French Development Agency, J-P Fourie, Director and Head of Investor Relations at Metier, and Lucas Kranck, Founding Partner of Ascent, discuss the importance of equity for the scaling up of SMEs, and describe their activity to us from a practical point of view.*

Founded in 2004, Metier is one of Southern Africa's leading fund managers, specializing in development capital for medium-sized enterprises and sustainable infrastructure. To date, Metier has raised three funds for a total of more than $600 million.

READ [Tribune] For massive financing of SMEs

Ascent is a private equity fund manager that invests in companies in East Africa, including Kenya, Ethiopia and Uganda. He manages the Ascent Rift Valley Fund, an $80 million fund raised in 2014.

Proparco: Could you describe the market opportunity, as it appeared to you, for an SME strategy in your respective areas of intervention?

Lucas Kranck: We operate in economies where companies are rather in the initial phase of development and poorly organized in terms of governance and performance evaluation. We must help them to build themselves and de-risk them, thus unlocking value.

SMEs are usually family businesses where decision-making is centralized and informal. Most institutional investors are reluctant to take the risk of investing in SMEs and bringing them towards more formalization and professionalism. This is where Ascent develops its strategy, the bulk of whose value is derived from the development of internal systems and processes, enabling more fluid and dynamic decision-making as well as greater transparency.