I&P's vision

The SME sector is very poorly developed in developing countries, particularly in Africa, and all observers agree that it constitutes the weakest link in the continent's economic advance. We use the term SME to refer to structured businesses operating in the formal economy.

Scarce in number, SMEs often hold strong market shares and may be highly profitable. They frequently show sustained growth, which puts a strain on their short-term liquidity while, as a result of developing country under-industrialisation, they may be offered many investment opportunities in their own business fields or related activities. Beyond the challenges of the local environment, the development of SMEs is constrained by a lack of capital, management culture and administrative methodology.

In other cases, some SMEs fail to prepare for generational change. They risk failure at that point because nobody has been trained to take over the reins. An active search by the owner for a successor is often inhibited by the absence of structured and identified solutions, and by confidentiality concerns.

Another problem is that although developing country banking systems are often awash in short-term liquidity, they offer little in the way of long-term resources.

In this context I&P proposes equity and quasi-equity investments to finance and support the development and/or buyout of successful SMEs, with active management participation.