Development capital channeled into the region mostly flows through local banks. Growth-oriented SMEs need flexible, value-adding capital that banks are not structured to provide.
Banks in the region earn net interest margins well above those of developed-market banks, and many run large remittance-capturing businesses. They have little incentive to change the status quo. Lending practices tend to be conservative, centered on plain-vanilla term loans and strict collateral requirements, and long-standing relationships often carry significant weight in credit decisions.
The result is that entrepreneurs forgo positive-NPV projects for lack of adequate funding. Growth stalls, employment opportunities stay limited, and migration pressure builds.