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Ms Pearl Nkrumah, Head of Enterprise Banking at Stanbic Bank Ghana, speaking in an exclusive interview has reached out to government and the financial sector to aid small to medium enterprise sector businesses to boost Ghana’s economic growth.
SMEs are the biggest contributors to the Ghanaian economy with a whopping 55% contribution to the Ghana’s GDP. They are the biggest employers with a steadily growing employee base. It is in the country’s best interest to streamline their operational activities to enable a healthy economy.
She said for the country to fully benefit from the SME sector, there is the need to create a business environment that would make it easier and faster for SMEs to register their businesses and get the necessary certification and statutory/ regulatory approvals to commence business.
“If you look at the agenda setting policy statement from the government, it’s all geared towards investments in the private sector and this private sector is dominated by SMEs, yet, it’s not getting the needed attention,” she stated.
Cost of running business is expensive for SMEs with no standardized structures to getting things done. Government has to do a lot more with resort to innovative and simple processes when it comes to start-ups finding their ground and remaining in business to support the economic growth of the country.
“We always assume SMEs just need access to funding and access to market to thrive but what they need most is a friendly environment to operate in. If you are an SME and would want to have an international reach through export, before you can do your first export, you need standard authority certification, export promotion certification among others. These processes are not straight forward but requires a lot of patience for you not to give up in the process of getting these certifications,” she explained.
“When I say friendly environment, I mean simplified and convenient means of getting things done. For example; can I use a day to go through the standards authority certification? is it possible to sit in my house and have all my certifications done?” she asked.
Access to Finance
Ms Nkrumah mentioned that, as much as SMEs need funds to run and expand their operations, getting the fundamentals of a successful business operation right is crucial to making the business friendly to potential investors, financial institutions and other well-meaning individuals.
“Access to credit is not just about debt or borrowing, there can also be equity. An SME owner will tell you I have 100 percent interest in a good business and may consider its first interest in investment by way of debt financing; If it’s a promising business, ideally why don’t you swap equity for share investment?” she pointed out.
“As banks, we need to educate them to know that their businesses are at a point where they can get investors,” she added.
“To take advantage of investments, you need to be ready by putting in place good corporate governance structures, simple book keeping and practices, succession plan and adding value to people,” she mentioned.
Start-ups don’t need Loans
Ms Nkrumah also advised start-ups not to take loans to start their businesses.
“In Lending, the expectation is that any capital financing/loan is repaid from profits and repayment of any loan to support your working capital is from your account turnover. The underlining assumption is that if you haven’t even started making profit, why do you want to incur a debt? Instead of taking a loan, you can bounce that great idea off a friend and take some money from him to produce the first products,” she advised.
“At least test the market before you incur debt. It is even not profitable and prudent for banks to give loans to start-ups, especially when they don’t have confirmed buyers where there is somewhat an assured source of payment for goods purchased and ultimate repayment,” she added.
Banks must not shy away from SMEs
She however advised banks not to shy away from supporting SMEs because there are lots of opportunities for the banks to lend to them.
“They are the biggest in the business setup so if I have money, I will rather invest in them and help them grow the economy which helps to make the economy profitable for banks,” she noted.
“We also have a role to play by making sure the SMEs are ready for credit and at Stanbic, we have the Stanbic Incubator Programme that seeks to support start-ups through mentoring, training and advisory services on the fundamentals of starting a business among others.
Stanbic Enterprise Banking
Ms Nkrumah said it was in line with some of these peculiarities and multi-dynamic challenges in terms of the various industries such as Commerce, Retaining, Wholesaling, Manufacturing, Service SMEs play in that Stanbic Bank Ghana has a dedicated segment as enterprise banking to provide fit for purpose solutions to them.
The Enterprise Banking Value Proposition comprises;
1. Enterprise Direct which serves as the delivery and allows clients to receive services via the telephone and email. Customers can call and talk to experienced banker on any financial support, advisory services among others for free. This is a virtual centre where due to access to client information, the bankers have the opportunity to mine the existing data and hold value-adding proactive conversations for deeper understanding of clients business to predicts their needs and proffer solution There is risk in everything but when the fundamentals are right with robust monitoring structures , it minimizes the risk for the banks,” she indicated.
2. Enterprise Online which is a simplified online platform which allows SMEs to access their account balances and statement, effect local payments across banks, pay salaries with a maker checker functionality of segregated authority rights. This is to provide convenience for our clients to bank at anywhere from home or shop.
3. We also have a Payment & Collections Mechanisms through mobile money wallet to account linkage, Mobycash collection in our markets, POS, e-commerce, Cash Accepting ATMS, all to facilitate the collection of their sales any day and at any time.
4. Access to Finance with our Enterprise Smart Loan. We provide funding to businesses through our simplified lending solution ranging from secured to unsecured facilities where we do not require your audited or management account statements but rather support your needs in terms of stock purchase, duty payment, receivables, working capital shortfall with your account transaction statements. She said SMEs who are into trading can access loans from the bank under the unsecured scheme, ranging from as low as GH¢40,000 to as high as GH¢150,000.
5.Access to market. Stanbic has a trade club and online platform created for SMEs to meet buyers and sellers globally and interact. This is to provide an avenue for access to other markets to expand their product reach and source other materials among others.