The KfW (Kreditanstalt für Wiederaufbau), the world's largest national development bank, states the following in its Africa evaluations:
“The lack of access to financial services for large parts of the population still constitutes a central obstacle to economic growth and income security. MSMEs in both the formal and informal sectors play a key role in the vast majority of African countries, as they provide employment opportunities for a large part of the population and can therefore help to generate broad-based economic growth.
Micro, small and medium-sized enterprises (MSMEs), but also many SMEs, are hardly perceived as (potential) customers by the predominantly collateral-oriented banking world.
However, sustainable development requires economic activity that generates employment and income, as well as government revenue.”
In order to set sustainable development in motion, the problem of financing investments must be solved.
The key obstacle is the lack of equity capital.
For establishing the necessary creditworthiness from the banks' point of view, each investing company receives a grant of 30% of the investment costs. This subsidy creates the necessary equity capital. (In the establishment of new semiconductor factories the massive use of subsidies and grants is common practice in our country).
This lays the foundation for sustainable development. The increase in mass purchasing power attracts foreign direct investment.
The resulting economic development also has a geopolitical dimension. In those countries that successfully implement this strategy, a very broad middle class emerges and Western values (democracy, freedom and human rights, etc.) become dominant.
This is pushing back the influence of authoritarian states (China, Russia).