Alternative Financing Instruments Gain Ground as SMEs Face Persistent Credit Frictions
The persistent difficulty SMEs face in securing conventional bank lending is pushing the market toward a broader set of financing instruments. At a recent Douala symposium on March 25, industry practitioners, regulators, and financial intermediaries examined how non‑bank solutions can relieve liquidity pressure and strengthen the region’s financing ecosystem.
More than 300 participants attended the “Coffee Time” forum, which focused on aligning public‑sector priorities with the operational realities of local financial institutions.
Factoring, Leasing, and Islamic Finance: Instruments That Directly Address SME Constraints
Factoring was highlighted as one of the most immediately impactful tools for SMEs facing working‑capital gaps. By transferring receivables to a factoring company, firms convert pending invoices into cash, reducing exposure to late payments and smoothing operational cycles. Angela Ngo Ndouga, CEO of Yellow Factoring, emphasised that this mechanism is particularly relevant in markets where payment delays are systemic, and SMEs lack the buffers to absorb them.
Leasing was presented as another high‑utility instrument for asset acquisition. Instead of relying on bank loans that require significant collateral, SMEs can access equipment or property through lease contracts, preserving liquidity while still expanding productive capacity. Yannick Kemayou of Société camerounaise d’équipements (SCE) noted that leasing effectively bypasses one of the most prohibitive barriers in traditional lending: the need for hard guarantees.
Islamic finance also drew attention as a structurally different model that aligns financing with real economic activity. Its prohibition of interest and speculative transactions creates products built on asset‑backed structures, shared risk, and transparent contractual terms. For SMEs operating in sectors compatible with Sharia principles, it offers an alternative route to capital without exposure to conventional debt structures.
Capital Markets: A Pathway for Scale, but Not Yet for All
Speakers also examined the evolving role of the regional capital market. Regulatory adjustments by Cosumaf have opened the door for SMEs to raise funds through listings or private placements via licensed brokers. However, the eligibility thresholds remain significant. Marcel Ntonga of Elite Capital Securities Central Africa (EXCA S.A.) outlined the minimum requirements: incorporation as a joint‑stock company with a functioning board, a capital base of at least CFA10 million, and a workforce of five or more employees. These conditions ensure investor protection but limit participation to more structured SMEs.
Structural Readiness: The Hidden Variable in SME Financing
Across all discussions, one theme was consistent: financing tools alone cannot compensate for weak internal systems. Experts stressed that SMEs must strengthen governance, financial reporting, and operational transparency to fully benefit from any form of financing, bank or non‑bank.
Steve Stéphane Bime, CEO of PME Advice, argued that long‑term access to capital depends on SMEs improving their internal controls, documentation quality, and strategic planning. Without these foundations, even the most flexible financing instruments cannot deliver sustainable growth.
Source: Business in Cameroon
