The Head of Enterprise Banking at Stanbic Bank Ghana, Ms Pearl Nkrumah, has called for the creation of an enabling environment that will allow small and medium enterprises (SMEs) to thrive in the country.

She said for the country to fully benefit from the SME sector, there was 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.

Speaking in an interview with the Daily Graphic on April 3, she said SMEs were not getting the needed attention in the country despite being the biggest employers and contributing about 55 per cent to the country’s GDP.

“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.

She said the cost of running business is expensive for SMEs with no standardised structures to getting things done, therefore urging the government to do a lot more.

“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 require 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 also noted that access to finance remained a major challenge for SMEs.

She said this problem was in two-fold; which were; banks themselves not having a deeper understanding of the SME sector thus their inability to craft products to meet their needs, and the SMEs themselves not being ready to tap into the investments that are available.

“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.

She also advised the SMEs to be ready themselves for investment into their businesses by financial institutions and other well-meaning individuals/investors.

“To take advantage of investments, you need to be ready by putting in place good corporate governance structures, simple book keeping and accounting 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 challenges of SMEs that Stanbic Bank Ghana had a dedicated segment as enterprise banking to provide fit for purpose solutions to them.

The Enterprise Banking Value Proposition comprises; Enterprise Direct which allows clients to receive services via the telephone and email, 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.

She said the bank also had payment and collections mechanisms through mobile money wallet to account linkage, Mobycash collection in its markets, POS, e-commerce, cash accepting ATMS, which are all aimed at facilitating the collection of their sales any day and at any time.

On access to finance, she said its Enterprise Smart Loan provided funding to businesses through a simplified lending solution ranging from secured to unsecured facilities.

She said the bank also had a trade club and online platform created for SMEs to meet buyers and sellers globally for interaction.