Franchising as an instrument for the ADB for SME development

1. Franchising as an instrument for the ADB for SME development M. Bourenane Enterprises Support Service Division Manager m.bourenane@afdb.org

2. SMEs and economic development • Franchising as an SME development tool • Franchising in Africa • Franchising and the ADB • Some Concluding Remarks

3. SMEs and economic development • over 90% of private businesses are SMEs • main generators of employment • contribute to a more equitable distribution of income • contribute to local and regional development • promote a culture of entrepreneurship and other business-related skills due to their low entry barriers In Africa, SMEs generally lack technological and managerial capacities, leading to high failure rates

4. Franchising as an SME development tool • Job creation: direct and indirect jobs • Wealth creation: contribution to poverty reduction • Skills transfer and business linkages • Improvement in standards and quality • Generate entrepreneurship Franchising has a significantly higher rate of success than independently run SMEs

5. Evidence of the Existence of Franchising Adequate Environment to Support Franchising • Franchising in Africa Varying degrees of franchise activity were found to exist in 22 African countries

6. Factors that affect the development of franchising in African countries: • General enabling business environment • Population and market size • Proximity to larger franchising nations • Level of urbanisation • Literacy rates • Corruption

7. Constraints to the development of franchising: • Poor awareness by the different stakeholders • Lack of financing available • No specific franchising regulation • Disinformation as to existing business opportunities • Little private sector involvement and support

8. FINANCING PROGRAMMES • CAPACITY BUILDING INITIATIVES LEGAL AND REGULATORY INITIATIVES INTERNATIONAL MARKETING AND AWARENESS INITIATIVES Franchising and ADB: Main axes of intervention ADB

9. MOROCCO EGYPT Sponsor and participate in Franchising Seminars and Conferences SOUTH AFRICA NIGERIA Awareness Creation: Research and Publications JAI Seminar (TUNIS, CAIRO) INTERNATIONAL MARKETING AND AWARENESS INITIATIVES Franchising Report Franchising Toolkit

10. MOROCCO Technical Assistance Programme: FRANCHISE ASSOCIATIONS EGYPT • CAPACITY BUILDING INITIATIVES Non-regional Franchise Associations Other Local and International Experts Franchise Association of Southern Africa Network of African FRANCHISE ASSOCIATIONS

11. FINANCING PROGRAMMES FIRST PROGRAMME to finance franchisees in South Africa SADC ? Morocco Egypt ??? ROLL OUT OF THE PROGRAMME

12. Last year’s seminar an overview: • Franchising as business format • Status of franchising • Challenges • Role of private sector and its support institutions • Access to finance • Policy and regulatory issues • International versus indigenous franchising

13. This year more in-depth and new topics: • Franchising associations • Self-regulation • Laws and regulations • Business development services for franchisees • Regional franchising development through indigenous and international franchising

14. Concluding Remarks • Franchising can have positive development impact in Africa • Potential should be assessed with a medium to long term perspective • Important to bring all stakeholders together to address existing constraints with a Public-Private Partnership approach • ADB can play facilitative role along with other stakeholders