Launched in March 2018 in Senegal, the Delegation for Rapid Entrepreneurship (DER) delivered its first funding at the beginning of August. In this exclusive interview given to Financial Afrik, Papa Amadou Sarr, the General Delegate of this new state structure, which presents himself as a summary of the public and the private, returns to the philosophy, the model and the long-term objectives of the DER. After a stint at the OECD, at the Bill and Melinda Gates Foundation and then at the head of the Competitiveness Department at the Ministry of the Economy and Finance, Mr. Sarr is now in charge of this new challenge of the government. Senegalese to meet the needs of young women and men entrepreneurs.
Can you come back to the philosophy of the DER?
The DER is a hybrid institution that straddles the public and the private sector and aims to meet the needs of young women and men entrepreneurs in Senegal who need financing ranging from 10,000 CFA to 200 or even 300 million FCFA or more. It also aims to strengthen the capacity of these entrepreneurs to support them in terms of initial training and to hatch the entrepreneurial spirit among Senegalese youth throughout the country.
The philosophy of the DER is twofold: firstly, it is an institution whose role is to deal with the legendary slowness known in our African administrations, in particular by respecting the rules set by the public administration with innovations through digitization, dematerialization, speed, proximity, meeting people and taking into account the needs of each other in the field. Second, the DER wants, beyond the entrepreneurial spirit, to reach a whole layer of the population that has never had access to financial and banking services to increase the rate of banking and financial inclusion, but also to formalize more our economy.
In summary, the DER is a cocktail of formalization, financial inclusion, technical and financial support for young people and women entrepreneurs in Senegal.
The delegation has just disbursed 10 billion FCFA for 15,000 beneficiaries. What were the award criteria and what are the expectations?
On Monday, August 6th, we held a ceremony to hand over the first funding. This was a first in terms of the return of the DER on the Senegalese or entrepreneurial economic scene. It was an opportunity for us to test the working hypotheses that we have developed over the last six months across the entire territory. To come to the selection criteria, it’s very simple.
After the launch of the project last March, we toured the country for a month, covering all the regions, departments and most of the communes to meet the populations, beneficiaries and administrations. With these different interlocutors, we discussed the objectives of the DER and its modus operandi while taking into account their needs.
After this step, we developed our own manual of procedures with the help of a local cabinet that allowed us to define the procedure taking into account what has been done by the other structures of the State since 10 years, including ANEJ, FNPJ, ADEPME, etc.
The goal was to be as fast as possible, transparent, neutral and above all effective. And that’s what led us to choose specific sectors such as agriculture, livestock, fishing, digital economy and transport etc.
The distribution method was based on the economic potentials and value chains of each region as well as the needs expressed by the beneficiaries themselves in the field. We have implemented a scoring system that defines the minimum, maximum and median amounts for the empowerment part.
For projects of one million or more, an internal investment committee chaired by the General Delegate examines and validates the files in a transparent and collegial way.
What are your long-term goals?
Our long-term goal is to enable Senegal to achieve emergence, because the initiative of the establishment is in line with the policy of the Head of State, namely the Senegal Emerging Plan (PSE) which aims at emergence by 2035.
It is therefore to have 50,000 bank accounts open each year, 100 thousand direct or indirect beneficiaries, and at the same time to allow these young beneficiaries to formalize themselves by benefiting from tailor-made support that will enable them to enter the formal economy and to contribute to GDP growth and the emergence effort.
The DER is an essential link in emergence targeting a very specific and very fragile segment, namely young people and women, who are the most disadvantaged social strata with the least financial means. In addition, the Delegation wants to create technical capacities to help them enter this production chain and the Senegalese economy.
Do you plan to transfer the DER into funds, like Fongip, Fonsis, etc.? ?
The DER is already a fund because the resources we have come from the fast entrepreneurship fund. On the other hand, we deliberately did not call ourselves a fund because we do not intend to be a fund in the classical sense of the term, ie an investment fund, a bank which is only interested in financial profitability or profit.
It is the holistic approach of the accompaniment of the entrepreneurship that is to say of identification of the project, to the maturation and the follow-up … which interests us.
In other words, the DER is on the whole chain in terms of providing support, capacity building and financing but also monitoring the future of these beneficiaries.
The traditional fund has huge and high production costs and would like the rate of return to be around 12% at a minimum while the DER is at 5% in total effective rate. Our goal is to create future national champions.
What economic model or country was the DER inspired from?
The business model was created by the DER and its collaborators. For six months we looked for the right model for the country.
We have identified four modes of intervention. The first mode of intervention is economic empowerment, which aims to support young women and men so that they can produce, be financially independent and not live with subsidies or state aid.
The second mode of intervention is the financing of the company or private initiative aimed at young Senegalese with businesses. They struggle to access bank financing. without collateral, which means that conventional banks with regard to BCEAO standards and prudential ratios to respect can not lend them money.
The third mode of intervention is the strengthening of value chains throughout the territory.
The Delegation decided to take the bull by the horns using these value chains as potential growth niches and devoting significant resources of at least 300 to 400 million per year and per sector (horticulture, rice, cashew … ).
Finally, the last mode of intervention is incubation and capacity building. Through the benchmark, we have been able to better understand the real needs of the populations. It is not only about financing, but also about support and follow-up to ensure the success and sustainability of their projects. Thus, in partnership with the authorized structures and operating in the training such as the ADEPME, the Office of Upgrading, or other structures of the State, the DER will provide entrepreneurs with tailor-made support.
Our business model is therefore based on these four modes of intervention, bringing together financial and non-financial service offerings in order to perfectly address the targets. In terms of macroeconomic speaking, the model is under construction. To this end, we have begun a consultation procedure with three firms with whom we will work on the strategic plan of the DER, a five-year plan that will define priorities, orientations, approach, funding methods and even the target organization chart of the DER. It will be a question of including comparative approaches with countries that have had to be models of fast entrepreneurship or mass entrepreneurship like China, South Africa, Canada, Israel … These are all countries that have made a qualitative leap by focusing on self-employment or youth self-employment.
What will be the impact on the banking rate in Senegal?
The DER has been looking for young people and women who do not have easy access to bank accounts because banks are often not available in the most remote areas of the country. The DER, with the means and payment platforms set up as mobile payments, goes to meet these populations to give them financial education, encourage them to use banking products, and, little by little, these customers will mutate in classic bank customers.
This is a breeding ground for the banking sector. This is why I told the president of the Association of Professionals of Banks and Financial Institutions (APBEF) that the DER must be seen not as a competitor but a partner.
In addition, in terms of banking, we aim to make Senegal the first country in terms of the rate of financial inclusion or banking in the UEMOA.
You have established partnerships with two banks, the National Bank for Economic Development (BNDE) and the National Agricultural Credit Fund of Senegal (CNCAS). Do you plan to expand this partnership to other banks?
These banks are not exclusive, it was not our goal to work only with these two banks, but a call for applications was made. The negotiations were conclusive and led to the signing of the agreements with these two banks.
In addition, we are in contact with the mutual credit of Senegal, and have received the CMS, ACEP, PAMECAS and CONFINA and proposals have been made for some. Discussions continue to build new partnerships, our doors are not closed.
On the other hand, we will set some criteria as a state because we have the possibility to make direct financing to support the beneficiaries and the financial partners will be our relay for the funds’ availability. The DER also offers its targets to intervene in co-financing, equity participation or setting up guarantee lines.
If we can do it with conventional banks or microfinance institutions, that will be ideal. But depending on the conditions we want, that is to say a rate of 5%.
. As part of the equity investment, the model is being set up, we must applaud the approach of investment funds with whom we discuss avenues of collaboration for a partnership and sharing expertise in the image Teranga capital and Fonsis with whom we will work to broaden the tax base but especially the financial inclusion base in Senegal.
