We are paralysed in such a way that our thinking capacity is hemmed in by old age practices and cultural norms that threaten to collapse our entire financial system. Our way of doing things makes corruption a norm rather than a cancerous option to be avoided, replaced by sound financial management and good book keeping at the least.
What has now come to be known as the “UT Way - a loan in 48 hours” is fast challenging the traditional banks, as recent upstart in the financial sector, UT Bank takes over from the orthodox way of business as usual.
Last week, 8th October, Retired Captain Budu Koomson of UT Bank provided great insight into possible solutions for the SME conundrum of access to finance.
Successive Governments tout the private sector as the engine of growth for Ghana and in consequence the SME sector becomes the focus for all planning but unfortunately, more rhetoric than action.
Presenting his concepts for “curing” the SME problem, Budu Koomson described three pillars and several anchors to pin these pillars down for possible resolution to our SME conundrum.
Government, Banks as Suppliers and SME’s. A crisp list of his views needs very little elaboration.
What Government must do
Create macro economic stability
Promote sound fiscal policies
Present a sound National Strategic Plan
Provide good regulation and Institutions
Ensure a functional legal system
Provide a good and effective tax system
Manage public hostility toward Government
In themselves these anchors are by no means novel to Ghanaian businesses and to our Governments. The fact that we keep bringing them up as requirements to ensure financial stability and progress in governance means we do not have a mechanism to remove the bottlenecks in our structures. For the umpteenth time of any government in our history, this paralysis does not seem to have a cure.
Where Banks are going wrong
They have adopted a basically alien system of banking
The banking environment is chaotic
Banks are not making any effort to listen to the SMEs
Banks employ Ivy League graduates who talk down to SMEs
Banks have a latent mistrust of the SME or informal sector
Listen to any SME tell you about their experiences with a bank or other financial institutions when they have tried to raise working capital will confirm this litany. The present banking structure and processes do not favor serving the SME market.
What the SMEs are facing and doing out of turn
They have a lack of trust in Government and the system
They are last to understand when there is a change in Government policy
There is still a criminalization of origins of finance going back to revolution days
There is very little documentation of transactions and thus a lack of transparency
SMEs lack planning and scientific and financial analysis
SMEs have a clear lack of financial discipline
Cultural practices and social and extended family pressures are priority ahead of business requirements
There is a lack of use of research and development and a resistance to change from old ways
SMEs lack a certain level of education required to move ahead in business
The Human willingness factor
These are classy bottlenecks identified by practioners. To hear Budu Koomson speak gives you hope that there are possible solutions to these and other SME issues. The simple fact that after 13 years UT Bank has bothered to fashion their own way of resolving the market is a mark of an educated, sophisticated and culturally savvy persons with a formula that might fix the SME finance access problem.