Financing Technolo...

infoDev launches new report "Financing Technology Entrepreneurs & SMEs in Developing Countries: Challenges and Opportunities"

The report addresses the Role of Private Sector Finance in Scaling Up ICT-Enabled Innovation & Entrepreneurship in Developing Countries

A key finding from infoDev's Incubator Initiative and our country work on growth and competitiveness is that there is little available financing for technology entrepreneurs. Without appropriate financing, the inevitable result is a significant slowdown in the business development process, which, in a fast moving business such as ICT, may ultimately jeopardize chances of success. To better understand the financial challenges facing technology entrepreneurs, infoDev commissioned this study, which assesses the current efforts by multilateral institutions and investors to address the financing needs of ICT and ICT-enabled SMEs in developing countries, and identifies the key challenges and constraints to meeting these needs.

In developing countries, SMEs have great difficulty in obtaining the necessary financial resources to effectively scale up and grow their businesses. For SMEs competing in the ICT industry and ICT-enabled (ICTE) activities, the challenge of accessing growth capital is particularly acute. In the ICT/ICTE sector, industry specific aspects often limit the access to finance such as the high-tech nature of the business, which magnifies the informational asymmetries, or the intangible nature of assets that can be leveraged as collateral for loans.

This report traces the nature, extent, and root causes of the financing gap that plagues SMEs in the ICT/ICTE industry in developing countries. Results from this study confirm the existence of a financing gap, in the sense that seemingly well deserving ICT/ICTE operators have limited or no access to external financing when the stage of development of firms, the particular features of the various sub-sectors, and the conditions prevailing in different countries are taken into account.

The study "Financing Technology Entrepreneurs & SMEs in Developing Countries: Challenges and Opportunities" provides:

  • An assessment of the general obstacles to SME financing;
  • An assessment of the financing needs by small businesses in the ICT/ICTE industry by sector;
  • A review of the financing sources potentially available to ICT/ICTE small business across the countries surveyed.

The report also provides recommendations regarding possible measures for alleviating the financing gap faced by small firms in the ICT/ICTE industry.

Separate country reports provide detailed results for the ten countries surveyed. These reports also include the profiles of SME financing organizations and small ICT/ICTE enterprises interviewed during the fieldwork in these countries. These include Argentina, Brazil, India, Kenya, Morocco, Peru, the Philippines, Senegal, Ukraine, and Vietnam.

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