FIRIFINANCE 3rd Edition: Financing Senegalese SMEs

Senegal’s SMEs Seek “Endogenous” Financing Solutions at Fififinance 2025

By Archyde News

Published: April 12, 2025

Dakar, Senegal – The third annual Fififinance conference, a pivotal event focusing on financing for small and medium-sized enterprises (SMEs) in Senegal, convened on April 8, 2025, in Dakar. This year’s theme, Financing otherwise: endogenous and inclusive solutions for the development of SMEs/SMIs in Senegal, underscored the urgency to find innovative financial models tailored to the unique needs of senegalese businesses. The event drew together a diverse group of stakeholders, including economists, government officials, and community leaders, all united by the goal of improving access to capital for local businesses.

SMEs are the backbone of Senegal’s economy, representing over 95% of the nation’s businesses. though, these enterprises frequently enough struggle to secure financing due to factors such as informality, lack of collateral, inadequate accounting practices, and limited managerial training. These challenges substantially hinder their growth potential, as highlighted by Sophie Coulibaly Mbengue, CEO of Kapit Group.

Senegalese SMEs represent more than 95 % of the national economic fabric. However, thay remain faced with numerous obstacles in terms of access to financing, due to their informality, the lack of guarantees, structured accounting or low management training. So many brakes that limit their growth potential.

Sophie Coulibaly Mbengue, CEO of Kapit Group

Participants engaged in discussions at Fififinance 2025 in Dakar.The focus was on innovative financing solutions for Senegalese SMEs.

The situation in Senegal mirrors challenges faced by small businesses across the African continent and even in parts of the United States, where access to capital remains a notable hurdle, particularly for minority-owned businesses. The U.S. Small Business Administration (SBA), for instance, offers various loan programs and resources to address these issues, but awareness and accessibility remain ongoing concerns. similarly, initiatives in Senegal aim to bridge this gap.

Mbengue, the initiator of Fififinance, emphasized the inadequacy of customary banking solutions for SMEs in Senegal. The classic solutions proposed by banks remain largely unsuitable. As for microfinance institutions, even though they are trying to fill this void, their interest rates – up to 25 % – considerably slow down business development, she stated. this resonates with the experience of many small business owners in the U.S.,who often find themselves caught between the strict requirements of traditional lenders and the high costs of alternative financing.

During the conference, experts explored alternative and lasting solutions to overcome these financial obstacles. Key strategies discussed included:

• Islamic Finance: Exploring Sharia-compliant financing options that align with ethical and religious principles.
• Participatory and Alternative Funding: Promoting crowdfunding, angel investors, and venture capital as viable alternatives. This is similar to the rise of platforms like Kickstarter and gofundme in the U.S., which have enabled entrepreneurs to bypass traditional funding channels.
• Public-Private Partnerships (PPPs): Developing collaborative initiatives between the government and private sector to create a more supportive ecosystem for SMEs. In the U.S., PPPs are often used for infrastructure projects but could be adapted to support small business development.
• Financial Education and Support Services: Strengthening financial literacy and providing mentorship to help entrepreneurs professionalize their businesses. This echoes the SBA’s emphasis on counseling and training programs for small business owners in the U.S.

Ndeye Sokhna gueye Diallo, CEO of BSD Consulting, emphasized the need for structural reforms, advocating for adapted guarantee mechanisms and to reform the legislative framework in order to encourage national investment. This mirrors ongoing debates in the U.S. about regulatory reforms to promote entrepreneurship and reduce barriers to entry for small businesses.

One potential avenue for exploration is diaspora investment. Many Senegalese citizens living abroad, particularly in countries like the United States and France, could be incentivized to invest in local SMEs through favorable policies and guarantee programs. This approach has proven triumphant in othre developing countries and could be adapted to the Senegalese context.

Impact and Future Directions

The third edition of Fififinance served as a catalyst for in-depth discussions on reforming SME financing in Senegal. The emphasis on endogenous solutions, leveraging local resources and expertise, signals a promising path forward for revitalizing the national economy. By fostering collaboration among public, private, and community stakeholders, Senegal aims to create an environment that promotes sustainable and inclusive growth for its SMEs.

the Fififinance conference in Dakar was a crucial step toward addressing the financial challenges faced by Senegalese SMEs. The focus on innovative, locally-driven solutions offers a model that could be adapted and applied in other developing economies, as well as inform strategies to support small businesses in the United States.

What are the main challenges that Senegalese SMEs face when seeking funding, as highlighted by Mr.Bagoré Bathily in the interview?

Interview: Bagoré Bathily on SME financing Solutions in Senegal

Archyde News: Mr. Bathily, thank you for joining us today. Yoru insights into Senegal’s SME landscape, particularly regarding financing, are highly valued. Could you begin by sharing your perspective on the core challenges Senegalese SMEs face in accessing capital?

Bagoré Bathily: thank you for having me. from my experience, and as highlighted at the Fififinance 2025 conference, the obstacles are multifaceted.Many SMEs lack the formal structures, collateral, and track records that traditional lenders require. This, combined with frequently enough-high interest rates from microfinance institutions, considerably hampers their potential for growth and innovation.

Archyde News: The conference emphasized “endogenous” solutions. Could you elaborate on some of the most promising alternative financing avenues being explored,such as Islamic finance and participatory funding?

Bagoré bathily: Certainly. We’re seeing considerable interest in Sharia-compliant financial products, which can align with the ethical principles of many Senegalese entrepreneurs. Additionally, participatory funding models like crowdfunding and angel investment are gaining traction. These options enable SMEs to bypass traditional banking channels and access capital through diverse means.

Archyde News: Public-Private Partnerships (PPPs) where also discussed. How can these partnerships effectively contribute to fostering a more supportive ecosystem for smes?

Bagoré Bathily: PPPs are very vital. They can facilitate access to capital but also create a more conducive business surroundings. By combining government resources and private sector expertise, we can offer a more streamlined means to provide mentoring programs, financial education, and guarantee mechanisms.This can significantly reduce the risk for investors and increase the long-term viability of Senegalese SMEs.

Archyde News: Diaspora investment was mentioned as a potential driver. How might Senegal leverage it’s diaspora community, particularly those in the United States and France, to unlock additional capital for local businesses?

Bagoré Bathily: The Senegalese diaspora possesses meaningful financial resources and a vested interest in their homeland’s prosperity. By creating attractive investment policies, favorable guarantee programs, and offering tax incentives, we can encourage diaspora members to invest in our SMEs. This is an effective way to drive growth and development in Senegal.

Archyde News: Looking ahead, what are the most critical steps required to achieve sustainable financing solutions and foster long-term growth for Senegalese SMEs?

bagoré Bathily: We need a multi-pronged approach. This includes stronger regulatory frameworks, adapted guarantee mechanisms, improved financial literacy programs, and the ongoing exploration of innovative financing models. Building trust between lenders and SMEs is also a key factor, as is fostering a culture of entrepreneurship that embraces both innovation and sound financial management. In the long run, the success of endogenous solutions will pave the way for a stronger Senegalese economy.

Archyde News: Mr.Bathily, what role does Teranga Capital, which launched an impact fund dedicated to Senegalese SMEs, play in these efforts, and how can it help?

Bagoré Bathily: Teranga Capital, with a fund specifically focused on impact investing for Senegalese SMEs, is part of the solution. Supported by initiatives like I&P (Investisseurs & Partenaires) and its support for La laiterie du Berger since 2005, this type of fund can help bring more focus to the importance of financial inclusion and help SMEs get the right funding.

Archyde News: Mr. Bathily, thank you for your time and your valuable insights. It’s clear that addressing the financial challenges faced by Senegalese SMEs requires collaborative and innovative steps.

Archyde News: We invite our readers: What do you think is the most crucial strategy for improving access to capital for SMEs in Senegal? Share your thoughts in the comments below.