This article was produced with the support of Ananse Africa
Panellists at the second Ananse Africa roundtable which proceeded under the theme – The Fashion Financing Paradox: Financing Pathways for Africa’s Fashion and Design MSMEs – stressed the need for “targeted credit guarantees, dedicated funding mechanisms and better implementation of trade policies” to de-risk investment, formalise businesses and unlock market opportunities.
They noted that despite the immense potential of a sector estimated to generate over $200bn in revenue annually and create as many as 20 million jobs by 2030, its composition of micro, small, and medium-sized enterprises, leaves it facing significant financial constraints.
Findings from Ananse’s 2023/24 survey of nearly 7,000 creatives reveal that more than 70% earn less than $250 per month, mainly because of their exclusion from sustainable finance and growth opportunities.
The African Development Bank on the other hand estimates that there is a $331bn financing gap for MSMEs in Sub-Saharan Africa exacerbated by a cocktail of challenges – high collateral requirements, limited financial documentation, low financial literacy, and widespread informality.
To address this paradox, Ananse Africa in collaboration with African Business magazine convened a high-level webinar to explore pathways toward unlocking the full economic potential of the sector.
Speakers included Sam Mensah, Founder and CEO of Ananse; Osahon Akpata, CEO, Canex Creations; Obi Asika, Director-General, National Council for Arts and Culture (Nigeria); David Maynard, Country Director of the British Council, Ethiopia; Dr. Karimi Ngeera, Finance Director, HEVA Fund and Mercy Mutua, Head of Access to Finance at the Mastercard Foundation. It was moderated by Nigerian media personality, Ifunanya Igwe.
Setting the stage for the discussion, Sania Sayeeda, Research and Data Analyst at Botho Emerging Markets Group, pointed out that while creative MSMEs need finance to be able to scale, grow and formalise, existing financing tools are not fit for purpose.
“When MSMEs go and look to apply for loans, there’s a 40% rejection rate and this has grown from 20% in just six years,” she said, adding that “our financing tools and products are not designed to meet this segment of MSMEs.”
Providing further context in his opening remarks, Mensah explained that fashion MSMEs remain trapped in that financing paradox because “without access to finance, they cannot fulfil larger orders and so they remain small. Remaining small makes it difficult for them to access finance. And so, the very resource that they need to grow is denied to them because they haven’t already grown.”
Osahon Akpata in reinforcing the point noted that “Fashion entrepreneurs can be bankable,” but only if financing models adapt to the realities of the value chain. Canex, he said, is now deploying alternative credit-scoring systems and aggregation strategies to meet SMEs’ typical $10,000–50,000 capital needs.
Explaining the role of Canex Creations in making African creativity economically viable, Akpata said that Canex Creations has expanded from an initial $500m vehicle into a $2bn vehicle supporting seven verticals including fashion, film and TV, music, sports, visual arts, gastronomy, and literature.
Speaking further, Akpata noted that despite the challenges demand is real, as has been borne out by Canex Presents Africa’s showcases in Paris and Milan.
In his comments, Obi Asika revealed that aside from private sector interventions, the state has a role to play in empowering African creatives. The Nigerian government has embraced the task, commissioning a data firm to map ten core creative sectors.
“Our data is showing us that we can achieve perhaps 3 million jobs,” he revealed, noting that fashion was one of the sectors analysed, accompanied by a deeper examination of the textile and garment manufacturing value chains to inform more targeted policy actions.
“With our soft power in Nigeria, we have enormous attention,” he noted, but “we don’t have products and merchandise for the attention we’re generating.” This gap, he said, represents a multibillion-dollar opportunity in which the fashion industry could play a decisive role.
Expanding on the role of governments, David Maynard argued that “governments in some countries don’t fully recognise the financial, historical and cultural value of the creative industry,” which is dominated by “tiny, micro companies.”
He added that creatives themselves often lack the collective structures needed to influence policymakers. “If they formed associations, they would potentially have a much stronger voice in influencing policy and opening up some of those financing options.” he said while suggesting immediate interventions such as tax relief, export incentives, and creative-economy funds where entrepreneurs “are not required to turn up with three years of financial records but can still have access to finance.”
Dr. Ngeera speaking on efforts to deal with the challenges noted that fashion now constitutes 42% of HEVA’s portfolio, with average payouts of $18,000. “The fund provides a mix of working capital, asset financing, and trade financing aimed at addressing both capital affordability and access to capital,” with concessional rates as low as 7.5% and the use of aggregators to strengthen credit decision-making. She backed “first-loss guarantees” to “increase the lender appetite from the bank’s perspective.”
On her own part, Mercy Mutua stressed that the challenge is not simply lending more but “changing the rules of the game and really allowing more actors to lend differently.” She explained that the foundation in line with its commitment to help “30 million young people to access dignified and fulfilling work by 2030,” is willing to “take that first hit” to catalyse capital flows, while building shared digital data assets to move the industry “away from the collateral lending that you talked about.”
Contributing further, Mensah added that liquidity shortages force merchants to reject confirmed orders, which is why Ananse introduced cash-advance features. “If we as an industry can work together and collaborate and find innovative ways, then that would be a very positive thing for the creative sector on the continent.”
Akpata noted that perceptions of risk persist because “the data is readily available, but the stories are not told, and the case studies are not done.”
On non-financial risks, Ngeera flagged founder dependency, inconsistent production quality, and weak IP protection even as Obi Asika revealed that Nigeria has now passed an IP framework allowing “intellectual property, which in the fashion context, could be your textile, brand, design, or lookbook, [to] be available as collateral for finance.”
Asked by the moderator to name one intervention they believe would be a game changer, panellists converged on guarantees.
Mutua proposed “a guarantee fund specifically for the sector,” Akpata called for “a continent-wide creative working capital guarantee scheme,” while Ngeera argued that such instruments “formalise the sector without really punishing any business [and] move fashion from being culture to being an economic activity.”
As the session ended, Mensah added a complementary point: “The biggest obstacle is import duties. If we can get the AfCFTA to work, that would unlock so much growth for fashion creators.”
At the end the consensus was clear: without credit guarantees and tailored financing, Africa’s fashion entrepreneurs will remain locked out of growth – even as their artistry inspires global brands.