##saka at which views of various stakeholders on what needs to be done to address binding constraints to the sme sector were considered. the fact that the discourse on sme financing continues underpins two significant positions. firstly, it gives recognition to the fact that we are all aware of the potential of this sector in generating employment, promoting economic growth and reducing existing poverty levels. in low income sub - saharan african countries, smes and micro - enterprises make up about 90 % of all enterprises. however, due to the various constraints they face, their overall contribution to gdp can in some countries be as low as 20 % although estimates show that this could be scaled up to 60 % with the greater realization of the sector ’ s potential. contribution to employment can be as high as 63 %. for most low income countries, smes are the main bis central bankers ’ speeches source of jobs and income after subsistence agriculture. particularly significant is that they are a great source of livelihood for women who own more than half of smes while over 70 % of africa ’ s rural population survives through the formal and informal sme sector. there is little doubt, therefore, that smes form a solid basis for sustainable economic development on our continent. secondly, the continued discourse on smes reminds us of the possibility that we have probably done more talking about the problem than fixing it. although the development of smes is varied extensively across africa, what is clear is that in most countries a major obstacle to their growth is the lack of sustainable and cost effective financial products. south africa and mauritius in this region and north africa have done a commendable job in developing flourishing smes sectors. part of the reasons for success in these countries can be attributed to their modern financial systems and clear policies that support the growth of the sector. however, the fact still remains that for most african countries, a sustainable way of financing smes has yet to be found. as i mentioned earlier, the programme for this meeting is broad and extensive. but i would wish to draw your attention to a number of broad areas of reflection which i believe can help in delivering greater finance to the sector. the first area is that there is a need to accept that not all banks can or should even be expected to provide sme financing products. the cost structure and skills orientation simply make some financing institutions completely unsuitable to deliver sme products cost effectively. the implication of this is that greater effort must be placed on developing financial institutions that see sme financing as the

mr fazio gives an address on the italian capital markets and the need for new strategies in euroland address given by mr antonio fazio, governor of the bank of italy, at the euromoney conference, held in rome on 23 november 1999. * * * between 1985 and 1998 the stock of public and private - sector bonds issued in the group of ten countries rose from 90 % to 130 % of their combined gdp ; the market value of listed shares rose from 30 % to 100 %. the use of derivatives grew even faster : between 1990 and 1997 the notional value of those traded in organized markets rose from 40 % to 200 % of gdp. the flow of loans granted to non - residents by banks of the countries reporting to the bank for international settlements amounted to $ 1, 100 billion in 1997, or 5 % of the reporting countriesa€™ gdp. the integration of financial markets, the prospects for growth in the emerging countries and the transformation of the economies in transition have created the conditions for an increase in allocative efficiency at the global level. the constraint imposed by the scarcity of financial resources for investment has been eased, especially in the developing countries. the growing dissociation between the generation and use of savings may nonetheless increase the riskiness of investments. strategies aimed at maximizing profits in the short run and herding have added to the volatility of prices. large - scale recourse to derivatives, which are extremely useful in controlling financial risks, has aggravated the adverse effects of speculative behaviour in some instances. the new context calls for careful assessment of the adequacy of national economic policies and the efficiency of the financial system, as well as careful control of borrowersa€™ creditworthiness and the use to which they actually put the resources they raise. in recent years intermediaries sometimes persisted in directing large volumes of resources towards countries with serious imbalances. this behaviour generated tensions and in the end led to crises. italya€™s financial system is increasingly integrated into the global economy ; the adoption of the single european currency has intensified the process of integration. the return to monetary stability has created macroeconomnic conditions conducive to the expansion of the securities market. the size gap with respect to the other leading industrial countries remains to be closed. bonds the reduction at the global level in the volume of savings absorbed by public debt issues has freed resources for productive investment and contributed to the decline in interest rates. in europe,