Ernst & Young report urges SMEs in Rwanda to embrace private equity financing

By IVCPOST Staff Reporter

Jul 26, 2013 11:57 AM EDT

Rwandan small-and medium-sized enterprises (SMEs) were urged to welcome financing from private equity firms. Recently released "Getting down to business" survey by Ernst & Young reveals that the growth of SMEs in the country has been stifled by such factors as inadequate capital from banks and public markets. Bank loans also prescribe very high rates, which add to the problem. Private equity can help solve these problems, the report states.

In the last five years, private equity firms have invested close to USD 12 billion in Africa. Sandile Hlophe of Ernst & Young said that this "alternative source of funding" should be considered as it "helps facilitate the growth of any company or sector." Rwanda Ernst & Young partner Allan Gichuhi agrees. He said that a "cross-fertilization" of ideas and knowledge and skill transfer occurs when private firms work together with entrepreneurs. In addition, he disclosed that the partnership can also help improve a company's skills and expertise because it is able to leverage on the large networks that private equity companies have.

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