Business News of Tuesday, 1 December 2015
The Managing Director of Union Savings and Loans, Philip Oti-Mensah, has called for concerted efforts that “support young people with great ideas” to establish more enterprises in order to bring change and competition into the small and medium enterprises (SMEs) landscape.
The support, he said, should not only be in the form of loans but also total financial packages which help start-up firms as well as small and medium-scale enterprises (SMEs) to grow.
He therefore called on financial institutions to improve deposit mobilisation, transaction banking and lending. “We, as financial institutions, need to position and brand ourselves such that we are able to mobilise cheap deposits so we can give to SMEs at lower rates.”
He noted that presently the interest rate to SMEs is about 50 percent – which is extremely high and one of the factors that can cripple them. “We have to resolve to mobilise deposits for giving SMEs reasonable rates so they can survive.”
Mr. Oti-Mensah made the comments in an interview at the second edition of the Africa SME Champions Forum, which ended in the Kenyan capital, Nairobi, recently.
The Union Savings and Loans boss, who earlier spoke on what SMEs need to do to go global, advised enterprises to concentrate on serving their local markets comprehensively before venturing into the global market.
“There is so much need within our local environment that must be met, and therefore there is no point in rushing to go global. Take your time to grow naturally before you consider serving the outside market,” he advised.
Speakers at the two-day forum called on policy-makers and the business community to collaborate so as to practically address the real needs of small and medium-scale enterprises (SMEs), and avoid theoretical approaches which usually remain on paper.
The International Finance Corporation of the World Bank Group, which was represented at the forum, described SMEs as firms whose financial needs are too large for microfinance banks, but are too small to be effectively served by corporate banking models.
They are typically defined as firms with less than 250 employees but include a wide range of types and sizes. In most cases the owner is the primary financial decisionmaker.
Various speakers at the forum identified marketing challenges, dearth of capacity, high energy costs, exorbitant interest rates and lack of access to credit as some of the bottlenecks that SMEs on the continent continually face.
The two-day forum, held at the Safari Park Hotel, was organised by the Africa SME Champions Forum based in Cote D’Ivoire in collaboration with the African Guarantee Fund. It was held on the theme ‘Unlocking the Potential of Africa’s SMEs’.
The event brought together 60 experts, about 300 business representatives and financial institutions from 41 countries in Africa and other parts of the world to share practical ideas on how to unleash the potential of Africa’s SMEs.
Expert speakers at the forum touched on topics such as: ‘Making SMEs the Engine of Africa’s Growth’, ‘Innovations in SME Financing in Africa’, ‘From Start-up to SME’, ‘Exporting to New Markets in Africa’, ‘How to Attract, Recruit and Retain Talent’, ‘Family Businesses’, and ‘Customer Retention’.
For the SMEs to be successful, the experts generally encouraged them to study the cultural environment in which they operate, and also have business plans that cover the people’s culture as well as their social outlook.
The SME players were also reminded that loans and subsidies are not gifts but practical assistance packages to help them to create new products and services, and thus produce more for the benefit of society and their own growth.
A special awards ceremony was held to honour best-performing enterprises on the continent. Ms Raphiath Soule of Cote d’Ivoire won the Best Start-up Entrepreneur of the Year for using waste material from banana/plantain trees to create bags and other products.
The Best SME of the Year Award went to Kenya-based Stawi Foods and Fruits Limited, processor of natural healthy foods, while the ORABANK of Togo won the SME Financing Institution of the Year Award.
According to the General Commissioner of the Africa SME Champions Forum — coordinator of the event, Mr Didier Acouetey, the organiser’s objective of bringing all stakeholders in the business of SMEs under one roof for mutual benefit was met. “We hope to have a more successful forum next year in Abidjan, Cote D’Ivoire,” he said.
Ghana was represented at the forum by Union Savings and Loans, Innovative Microfinance Limited, Strategic Security Systems International Limited, Gateway Innovations Limited, GFA Consulting Limited, Oasis Capital Ghana Limited, and Regality Ventures. The programme was sponsored by Union Savings and Loans, African Guarantee Fund, AfricSearch, IFC, Orrick, Ecobank, AFREXIMBANK, BPM, OCP and Ovamba.