Seed funding in Guinea promotes youth entrepreneurship
ITC partners with financing institutions in Guinea to lift young start-ups and fight unemployment, with 1,700 youth trained and $1 million in funding raised.
The International Trade Centre (ITC) recognizes that ‘Partnerships4Purpose’ can contribute to impactful projects and sustainable outcomes. To celebrate the teamwork behind these efforts, ITC is proud to highlight game-changing initiatives that are made possible through strong and meaningful collaboration.
Ninety-eight per cent of small businesses in Guinea do not have a bank account, while only around 4% have ever obtained a bank loan, according to the International Finance Corporation. Only 2.5% of small businesses and 8% of medium-sized businesses have access to lines of credit.
With this data, it is not surprising that over 90% of business growth in Guinea is self-financed. Young entrepreneurs who lack experience, money and collateral find it particularly challenging to find advisory services and funds to expand and stabilize their businesses.
The unique approach: Seed funding grants with financing for continuity and growth
The SOUTRA grant scheme, worth $510,000, is a Guinean government initiative that serves as seed funding for young entrepreneurs and start-ups who cannot access loans and equity solutions. The local partner for grant management and disbursement, selected in a competitive bidding process, is the government agency Fund for Industrial Development and Small and Medium Enterprises (FODIP). Created in 2018, it manages all micro and small business funding schemes in the country.
FODIP and the International Trade Centre (ITC) have worked together since 2019 to organize financial literacy training and coaching for young entrepreneurs. Fifteen Financial Management Counsellors were trained under ITC’s INTEGRA project to advise young entrepreneurs on business records, financial management and developing business plans. These Entrepreneurs are then connected to appropriate financing sources including financial institutions, investors, and other development programmes.
ITC’s INTEGRA project is a joint initiative of the Government of Guinea and the European Union under its Valletta Trust Fund. It aims to support the socio-economic integration of young Guineans through income-generating activities and sustainable jobs to reduce irregular migration to Europe.
The impact: Almost 200 young entrepreneurs and businesses obtained funding
Since 2019 some 1,700 young entrepreneurs and small businesses have been trained and coached, with the most promising connected to financing providers and development partners. To date, some 200 small businesses and young entrepreneurs have raised more than $1 million in grants and loans.
The ITC-trained counsellors assisted the entrepreneurs in benefitting from the SOUTRA scheme by coaching them to prepare and submit expressions of interest, business plans and pitches. That led to 400 applications for the grant scheme, of which 80 were short-listed and presented in front of three different panels composed of representatives from the European Union Delegation in Guinea, ITC, the Ministry of Trade, and the Bankers Association and FODIP. Out of the 80 who presented their businesses in May in Conakry, Guinea, 65 went on to receive grants under the SOUTRA scheme. Those selected will each receive about $3,700 to implement their project plans.
Before this pitching event, 40 other ITC-assisted lead businesses and cooperatives received grants worth $200,000. Fifty young entrepreneurs raised loans from financial institutions and other development partners, which secures a solid beginning for their endeavours.
Moving forward: Enabling a new Business Angel Network, mobilizing local private investment
In addition to its work with FODIP, ITC is partnering with the Private Investment Promotion Agency of Guinea to strengthen the capacity of financial institutions in developing products and services adapted to the financing needs of small businesses. ITC’s work is not stopping there. All three institutions are joining forces with the Business Angel Network of Switzerland to launch the first Business Angel Network of Guinea in December 2022. This new network is designed to stimulate private investment for small businesses, young entrepreneurs and start-ups.
The Business Angel Network of Guinea, initially managed by a group of strongly motivated pioneer Business Angels, will also allow Guinea to be integrated into the African Business Angel Network, another ITC partnership.
If you are looking to implement or expand similar schemes in your country please contact:
Yaya Ouattara, ITC Adviser on Access to financing and investment at ouattara [at] intracen.org (ouattara[at]intracen[dot]org) or send a message to financing [at] intracen.org (financing[at]intracen[dot]org) with SOUTRA in the Subject line.