Knowledge gap hindering MSMEs access to funds –Head, Union Bank’s SMEs

Ayokunnumi Abraham, head of the Small and Medium-sized Enterprises (SMEs) products & segment team at Union Bank, speaks on why it is still difficult for many small businesses to access loans from money deposit banks, in this interview with BusinessDay’s Josephine Okojie.

Can you give us a brief insight into your background and the positions you have occupied in your career?

I have worked in the banking sector for about 15 years, in the small and medium enterprises space and generally, business banking. My role cuts across relationship management, credit risk, and product management, which has given me unique insights into how SMEs operate in Nigeria, their challenges, and solutions to the problems the sector is encountering. I currently head the SME products and segments at Union Bank.

How would you say Union Bank is driving the growth of the SME sector in the country?

At Union Bank, we recognise small businesses’ substantial positive impact on the Nigerian economy. This has driven our continued support for the sector over the years resulting in significant growth in the industry. Given the bank’s understanding of the gaps and needs of SMEs in Nigeria, we work to provide products and non-financial services to serve these SMEs. These services, for example, cover the provision of market and industry insights, knowledge of the impact of government policy, and insights for more efficient business practices among others. In terms of products, our loan and transaction banking offerings are designed to address two critical issues affecting SMEs – the need for growth and profitability. These products were developed in line with insights obtained through regular engagement with clients who provide us with feedback that helps us truly understand their needs. This is Union Bank’s unique way of creating value for the customer beyond the traditional banking business.

Despite a lot of funding available for entrepreneurship development in the country, why is it still difficult for small businesses to access loans and intervention funds, especially from deposit money banks?

Access to loans and intervention funds is a big hurdle for many small businesses due to the need for adequate knowledge and understanding of the inherent business risks for the venture they are engaged in. Lack of reliable and accessible financial data is another major issue preventing SMEs from accessing the financing support they require for growth, irrespective of who is providing it. SMEs understand their products and services, but many need help to commoditise them in sustainable and scalable ways.

Apart from providing access to finance for MSMEs, in what areas is Union Bank supporting small business owners in the country?

As I mentioned earlier, Union Bank provides SMEs with a wide range of non-financial services. These services help them achieve effectiveness, efficiency, and sustainability as they conduct their businesses. The benefits include but are not limited to assisting them in understanding business cycles and dynamics, providing market and industry insights, demonstrating the need for governance and organisation, and showing the impact of government regulations, amongst other solutions. We provide these services during regular engagements with clients as required. We also support SMEs with managing their financial records by providing platforms to ensure their records are reliable and retrievable.

What specific products does Union Bank have to support MSMEs operators in the country?

Union Bank has numerous products and solutions that have benefited small business owners in Nigeria. First, we offer unsecured loans with friendly terms & conditions to customers. We also provide account management options that help reduce business costs and earn income. This is in addition to collection platforms that enable SMEs to track their sales on the go, guaranteeing excellent business performance and ease of reconciliations. We have also developed innovative tech solutions that have greatly benefited SMEs in the country. For example, our simple and user-friendly mobile banking applications for Businesses help the average SME owner transact easily and speedily to ensure optimal business performance. In addition, Union Bank recently launched a freelancing digital platform called Kula© that connects businesses to freelancers, two critical categories of SMEs. The initiative serves business owners who cannot afford to employ full-time employees but can outsource services to freelancers.

There have been many complaints from most money deposit banks that several small business operators in the country do not have the basic requirements to obtain a loan. What is Union Bank doing to address this significant challenge?

We are already addressing this challenge through our non-financial services. These services include providing the customer, in this case, the small business owner, with detailed information on the criteria and guidelines for obtaining a loan. The information we provide will help their business achieve efficiency and sustainability, making them easily eligible to access loans.

What are Union Bank’s plans regarding funding entrepreneurs and start-ups in 2023?

Global Finance recently named Union Bank the number one bank in Nigeria supporting SMEs, so we are ready to do more in 2023. Entrepreneurs or small business owners will continue to enjoy adequate funding from Union Bank as we ramp up support for the growth of this vital sector of the Nigerian economy. As a bank, we are also highly supportive of the tech sector. We will continue to guide startups in their preparations to be eligible for funding before we eventually fund them.

What is your outlook for the country’s entrepreneurship landscape in 2023?

The near-term outlook of the Nigerian Economy is optimistic, especially with the imminent changes in leadership at the highest levels of government. The various presidential candidates have emphasised their commitment to economic growth. They have made promises to create an enabling environment for businesses to thrive. With the creation of a better enabling environment by the government, the number of SMEs will grow, and they will be able to do more for their businesses. This will, in turn, stimulate the country’s economic growth.