Banks as catalyst for SME growth across Nigeria, Africa
The capacity of Small and Medium Scale Enterprises (SMES), to perform their role, as the engine of growth in an economy, is often hampered, by challenges such as, lack of access to finance, modern technology, and market with unfair competition to imported goods, among others.
The Central Bank of Nigeria defines small and medium enterprises (SME) in Nigeria according to asset base and number of staff employed. The criteria are an asset base between N4 million and N500 million, and a staff strength between 10 and 100 employees.
Catalysts for economic growth and national development- if their impact in developed and developing countries alike is anything to go by- the SME sector in Nigeria accounts for most Nigerian jobs and contributes nearly half of the country’s GDP in nominal terms.
There are over 37 million MSMES (Micro, small and mediumscale enterprise) in Nigeria and this number contributes almost 50 percent of GDP in nominal terms and account for 84 percent of all Nigerian jobs.
This is according to the most recent survey on the sector carried out through collaborative efforts of SMEDAN and NBS (National Bureau of Statistics).
SMES are catalysts for economic growth in many countries, because they have more flexible production opportunities compared with large enterprises. They adapt to the changes in demand in a short time and meet conditions for competition quickly.
Thus they contribute to national income, employment, productivity and entrepreneur training.
Most of the conglomerates, corporations and multinationals of today started as SME’S or mere business ideas that were nurtured before they blossomed into the big deals they have become today.
Access to funds has been labelled the most challenging obstacle in enhancing SME’S productivity, market watchers have unanimously submitted.
This is the reason some visiondriven financial institutions are quick to identify growth oriented businesses, provide the necessary financial back up for them in their teething stages and help them actualize their potentials.
A good number of these Nigerian financial institutions have now prioritized this in their products and CSR to-do list.
Evidence of this is contained in the numerous products, business plans, SME workshops, forums of financial institutions, all targeted at catalyzing their growth.
Also any organization that commits its resources to the growth of an uncertain business does so at a huge risk.
A list of the top four banks who have stood out in the support of SME’S propelling them towards attaining their lofty dreams include: UBA, First Bank, Fidelity Bank, and Wema Bank.
These banks have done extremely well in oiling the engine of growth for SME’S providing the needed capital and impetus for them to thrive.
In the case of First bank, there may be a perception that the bank doesn’t support SME’S adequately, that is not the case as they offer a handful of benefits to SMES.
There are three ways in which small businesses can benefit from the banks: they include, Invoice Discounting Facility, Contract Finance, Cash backed.
If you are determined and you have a viable business to show, then go for it. The bank gives loans with a 25% interest rate — the highest on this list. However, they try to help businesses enlisted under them by marketing them to all their customers. This small feat has helped considerably.
As for Wema Bank, the bank has more dealings with retail businesses. They have built their structure around retail banking, conducting transactions with market women and SMES.
It is worthy to note that Wema Bank gives loans from ₦100,000 to ₦1 million without any collateral. All you need is to have steady transactions for 6 months in your corporate account.
Their customer care service is also quite impressive, doing their best to answer to all your needs and inquiries.
To show you their eagerness to give out loans, they even have a loan calculator on their website which helps you calculate how much the bank would be making from your loans.
Currently, Fidelity Bank runs a radio program on Inspiration FM, Lagos, to educate SMES and give the necessary insights to accessing loans from the bank.
Fidelity Bank has also done well to create a Managed SME Division within the bank structure to cater for SMES.
Giving them a one- on- one advisory touch, accessing markets for their customers, and to guide aspiring entrepreneurs that are naive about how to run a business.
United Bank for Africa
Pan African Financial Institution, United Bank for Africa is one out of many that tops the chart of Nigerian banks pulling its weight and judiciously putting its money where its mouth is.
It has done this relentlessly for years and continues to innovate in helping to build businesses in Nigeria and across Africa in the 20 countries it has presence.
A lot of businesses owe their success stories to its backbone support and prowess in financial management, with which it provides guidance and requisite knowledge to Nigerian start-ups.
Their goal is to build requisite capacity in order to produce future business leaders of tomorrow. Quite a number of established business owners have been on their radio programme to share their experience. This is a step in the right direction and in 2016, they recorded massive increase in their SME customers.
Some of the following products have done well to inject the needed impetus for SME growth in Nigeria; The UBA SME Account: low cost account for SMES, way cheaper than the regular corporate account is one that was conceptualised with budding entrepreneurs in mind.
Structured with a low interest facility, business owners able to get ahead with little to bother about. Most importantly free advisory services are on hand to help put the customer’s business on a sound footing
UBA SME Asset Finance Loan: This package comes with up to N50m for a period of 3 years particularly for business asset acquisition or expansion.
Also, the UBA School Loans: gives a strong push of up to N100m payable over 5 years for school asset acquisition, purchase or lease of school buildings, buses etc and short-term loans to buffer cash flow needs of the school.
Another invaluable product is the Capacity Building Initiatives (UBA Business Series and MSME Workshop) which supports the growth of Micro Small and Medium Enterprises(msme) as well as equip them with the necessary tools needed to strengthen and sustain their businesses.
The bank also makes available Business registration services to provide quick support for unregistered businesses looking to regularize their companies. This service helps remove the hurdle of weeks or even months of delay in getting their businesses registered.
As for the UBA MSME workshop which underscores the banks passion in building Small businesses to their full potential, it has proven to be instrumental since it was inaugurated and acted as a propellant to success for most SMES. The MSME Workshop is a capacity building initiative held regularly, where business leaders and professionals proffer tips and share insights on best business practices and how small and medium-scale enterprises can build a successful and sustainable business brand especially in Africa’ challenging business climate.
The last edition of the bank’s MSME workshop specifically targeted financial record-keeping in businesses which is known to be a thorn in the side of small business owners.
Ifeanyi-eze who took the first session on Bookkeeping and Accounting Basics for Small Businesses, gave practical tips on how Accurate bookkeeping is a necessity for MSMES, stating that even though It may seem tedious at first, it is very important for business owners to keep track of their income and expenditure.
She explained the need for proper stewardship in the business, as the information generated is crucial for potential investors, lenders, tax authorities, Corporate Affairs Commission and so on, adding “When you open a business, you are a steward to yourself and to many other people. Capturing and documenting every income and expenditure will boost your business in ways you cannot imagine, therefore, stewardship and decision- making are two main reasons of book-keeping.”
UBA’S Group Head, Consumer and Retail Banking, Jude Anele, who spoke ahead of the workshop, pointed out that small businesses are the engine of any developing economy, hence the bank is committed to their growth.
According to him, MSMES should be armed with the necessary tools that will help galvanise their businesses, a factor necessitating the regular Uba-powered workshop for MSMES, to assist both customers and non- customers alike and to boost their businesses.
He said, “UBA is committed to the overall growth of its customers beyond banking services, and its passion is hinged on ensuring that customers and entrepreneurs run businesses that can stand the test of time”
This according to him should be done with the knowledge and experience required to take their businesses to the next level in Nigeria and across Africa particularly in the 20 African countries where UBA is present.
UBA’S Group Head, Marketing and Customer Experience, Michelle Nwoga, said the seminar is open to all business owners and leaders across Nigeria. She reiterates its importance because of the long-term impact which range from confidence, skills, knowledge, and resources.
Also the UBA market place which held in Abuja and played host to 20,000 visitors, 100 small and medium enterprises both leading private and public sector players reinforces UBA’S passion for entrepreneurs and SMES across Africa, most of whom gathered at the continent’s biggest entrepreneurial fair and got a unique opportunity to showcase their products before a sea of patrons.
The event held on July 26 and 27, 2019, on the side-lines of the Tony Elumelu Entrepreneurship Forum, the largest gathering of the entrepreneurship ecosystem in Africa.
At the master-class sessions which held during the Ubamarketplace2019, small and medium scale businesses had a rare opportunity to network and get solutions to some of the challenges they face in daily operations.
Also, entrepreneurs who are beneficiaries of the Tony Elumelu Foundation ( TEF) had the opportunity to make innovative presentations as well as pitch their businesses with a grand prize of a grant, courtesy of UBA.
Group managing director, Kennedy Uzoka, speaking about the event, stated that “UBA has always been at the forefront of entrepreneurship across Africa, undertaking many projects aimed at contributing to supporting Africa’s growth and economic integration. The birth of the Ubamarketplace and this entrepreneurial fair is a testament of our commitment to African SMES.
Because of this evident impact of SME’S all over the world, there is no gain saying that more financial institutions should join the laudable efforts of UBA in this laserfocused contribution and support of Small businesses whose impact and overall contribution cannot be quantified.