How To Secure Funding That Is Adaptable, Creative, And Solution-Focused
Summary of the SME Finance Virtual Marketplace - July Live Session
The SME Finance Forum since its inception in 2015 has been featuring innovative fintech, helping connect members to different technologies and partnership opportunities. Through our virtual SME marketplace, we offer, in particular, a monthly pitch session. The SME virtual marketplace is a unique online match-making platform promoting partnership and collaboration among financial institutions, fintech companies, and DFI.
On July 6th, the SME Finance Forum Marketplace session gathered six financial companies offering services ranging from financial facilities, retail banking, asset management and business loans. Read below a summary of their presentation:
The Power of Financial Support: Why SMEs Need It
One of the largest development banks in the world, Brazilian Development Bank (BNDES) represented by Tiago Peroba is the powerful instrument used by the Brazilian federal government for long-term financing and investment. For more than 70 years, BNDES has aided in the development of the Brazilian economy through fostering relationships between various stakeholders. BNDES is essential to the health of the nation's economy, its micro, small, and medium-sized businesses make up 44% of the nation's overall loan portfolio, 66% of the country's final contract positions, and 94% of the nation's former businesses. They currently have more than 60 accredited financial institutions, their partners providing credit through BNDES products and programs. Commercial banks, regional development banks, agencies for development, credit cooperatives, cooperative banks, and captive financial organizations are among them. In the past few years, BNDES has undergone a significant process of digitizing its platforms and business model in order to boost its cooperation with SMEs.
Five years ago, in 2017, they created an SME channel or marketplace to facilitate access to credit and offer solutions to their customers. BNDES is focusing on strengthening partnerships to stimulate the credit market and enhance distribution channels, delivering additional services through collaborations with various organizations, such as management tools and financial education. They emphasize digitizing processes, always looking for ways to shorten the time between a credit request and its actual release in a customer's account, minimizing interference with the client experience. Additionally, they are aware of how difficult it is for SMEs to obtain loans, partially caused by a lack of collaterals, so they focus on promoting the establishment of new guarantee funds and the strengthening of the existing ones.
Advanced Risk-Mitigation: The Key to Unlocking Better Access To Finance
CGC-Egypt, the Credit Guarantee Company in Egypt was represented by Nagla Mohamed Bahr - main role of the company is to enable financial institutions (banks & non-banks), to offer MSMEs favourable financing through the application of different guarantee products covering part of the expected risk of this finance. In light of the pandemic hit, policy-makers applied immediate strategies to overcome market challenges and secure business continuity through the utilization of guarantee. A fact resulted in a huge expansion of all guarantee schemes portfolios with potential higher risk and a clear need for post-pandemic plans, mainly focusing on the importance of implementing a more comprehensive guarantee model to tackle both the financial & non-financial needs of MSMEs. CGC-Egypt adopting this comprehensive model, started to shift their business focus to entrepreneurs and SMEs, rather than banks, and developed its new product “Direct Guarantee” on these bases & in partnership with the banks. The product targets the under-served & the un-bankable MSMEs, with a focus on women & young people, where CGC-Egypt directly reach the target MSMEs and assist them in identifying their real finance needs, complete the file needed by banks, incorporate technical assistance as needed, link the facilitated finance to new hires (job-creation), and hand over the client's whole file to the banks so that they can accept it and enter it into their books. The product is a digital-base, where a full-fledge platform is created for processing the complete cycle of finance issuance. In addition, the platform is enabling business to have access to potential hires, partner business, and technical assistance bodies. The platform shortly will establish a market place for this product with another comprehensive concept.
Unlocking the Potential of Africa's Pan-African Banking Sector
EcoBank Group was represented by Owureku Asare. This pan-african bank is present in 23 of the continent's 55 nations and focuses on resolving the fundamental issues that African individuals or businesses face. Over 80% or 90% of the continent's businesses are MSMEs, and they all struggle with a lack of collateral among other problems. To help their MSME clients, they developed an app called OMNI Light Script, which is a payment app. This software also lets small businesses do quick transfers. Corporate organizations like Nestle and Unilever also benefit from this app since it offers a point of sale that enables them to accept payments from clients. EcoBank also works in close partnership with fintechs, through a platform called FinTech Challenge. On that platform, they invite fintechs to tell them what problems they can help solved.
Additionally, they have teamed up with Google to provide their clients an online presence through Google Firm profiles. If a client is looking for a specific service and the business is still relatively new, they can quickly locate it and get in touch. Women entrepreneurs are EcoBank's primary area of focus and as a result has developed a comprehensive program to assist women in advancing the goals of their business and of business organizations that are exclusively comprised of women. EcoBank offers a variety of financial services, but their main priority has been to introduce a solution that enables small businesses to borrow against assets.
Solutions-Driven Digital Transformation In Banking
First City Monument Bank (FCMB) represented by George Ogbonnaya is a Nigerian bank having about 9.2 million clients, approximately $3.9 billion in client deposits, and assets of about $2.7 billion. The products and solutions they have created are for both retail and SME to address the issues SMEs encounter. One of the biggest problems SMEs encounters is affordability. Direct interest cost is high for them because of the inflation rate, therefore FCMB offers low rates and collateral. Additionally, there are numerous laws that make it challenging for banks to lend to SMEs. Waiting for the auditors' financial statements is one of them and is very often a source of delay. In order to assist SMEs, FCMB uses big data and digitization to help expand the ecosystem that enables SMEs to have the support structure they need to grow their enterprises.
With its scholarship program, which offers loans with no interest, mentorship, and training for the recipients, FCMB also focuses on women in business, giving them the tools they need to expand their companies and collaborate with other industries. FCMB gives SMEs who lack sufficient collateral coverage on their resharing structure loans totalling more than $80 million. They also have created the Business zone digital platform ecosystem. This platform provides networking and training opportunities. It is a one-stop shop for SMEs and businesses looking for knowledge and skills, assisting them with market assessments and choosing where to establish their operations.
How To Improve Access To Finance For SMEs
With nearly 40 million MSMEs in Nigeria, First Bank Nigeria represented by Helen Ihonre, is particularly focused on SMEs and emphasizes their significance to the Nigerian economy. SMEs play a crucial role in the economy. With the aid of strategic pillars, they have examined the problems that SMEs face in addition to their access to financing in order to better support the SMEs. The first thing that's been noticed was the policy and rules. This pillar aims to educate SMEs on governmental regulations, and First Bank notifies them of any updates to taxes laws that they should be aware of, then they perform capacity building by implementing programs with varied degrees of capacity by offering workshops, webinars, and large business clinics.
They have taken some of these costs for these SMEs to ensure that they have access to it and are more productive in their day-to-day operations. First Bank partnered with Microsoft to bring discounted services to SMEs because they recognize that they may not be able to afford sets in Microsoft or productivity tools on their own or certain accounts. Due to the difficulty and high cost of getting internet, First Bank works with ISPs to provide these SMEs subsidized prices.
They also offer heavily discounted technological platforms, and they even have workspaces for these SMEs after realizing that some of these folks cannot afford to rent offices. In order to provide workspace for these SMEs, they have collaborated with certain office buildings. People who are interested can visit SME connect first bank nigeria.com to access these deals because all of these services are hosted on this platform. Beyond financial services, women also have access to skill-acquisition programs like capacity development and are made sure they have access to financing by connecting them to financial institutions that offer specifically tailored loan facilities for women. Additionally, they provide the SME account, a special deposit product that enables SMEs to open accounts without paying any fees this solution to make sure that SMEs have enough money to operate their businesses. Additionally, they provide a facility for receivables financing called a "discounting facility" that guarantees SMEs receive up to 70% of the value of their invoices even when they are still awaiting payment from their principals. But more significantly for them, the banking system of First Bank is going through a digital transformation.
The Future of Client Experience: How Open Innovation Will Drive Transformation
Standard Bank Group represented by Sameer Jooma, was established in 1862 and operates in 30 countries around the world, making it the largest bank in Africa by asset size. Their business platform and methodology allow partners to join, changing it from a banking ecosystem to one that connects ecosystems to businesses. For Standard Bank, the definition of the trading ecosystem entails a network of participants who all assist the movement of goods between the manufacturer and the trader or SME. Their ecosystem strategy is very much a partner-led.
They also have identified a few key players at the end of the value chain, the communities around the trader, distributors, wholesalers, and manufacturers that help move the product between the different participants. They interviewed many traders across Africa who all stressed the fact that they prefer to purchase goods from a single provider. Based on that information, Standard Bank focuses on loans and payments to assist customers to obtain the appropriate goods at the appropriate locations. When their clients have products in store that needs to be purchased, Standard Bank will help them get more customers into their store. This approach is very much outside the typical bank role. Standard Bank will also help SMEs when they need to stock up, making sure they have the capital needed to actually get the product into their store. This enables them to obtain the stock they require when they require it.
About the presenters:
Brazilian Development Bank
The National Bank for Economic and Social Development is a development bank structured as a federal public company associated with the Ministry of the Economy of Brazil.
Credit Guarantee in Egypt (CGC-Egypt)
CGC-Egypt is the Credit Guarantee Scheme of Egypt, responsible for enabling MSMEs to have access to finance from financial institutions by providing guarantee cover on their target financial facilities.
Ecobank Group Commercial Banking
Pan-African banking conglomerate present in 36 countries and leading independent regional banking group in West and Central Africa, serving wholesale and retail customers.
First City Monument Bank Limited
First City Monument Bank is a full-service banking institution headquartered in Lagos, Nigeria that provides market-proven solutions that drive digital transformation in banking.
FirstBank has solidified itself as a brand of fortitude, strength and innovation in the Nigerian financial sector since its inception in 1894.
Standard Bank Group
Standard Bank Group Limited is a major South African bank and financial services group. It is Africa's biggest lender by assets.
If you want to learn more about those fintech, listen to the recording of the marketplace session HERE
Speakers’ presentations are also available HERE
We also encourage you to get in touch with them to make inquiries and explore partnership opportunities on our Virtual Marketplace which is open 24/7.
If you missed previous marketplace sessions, visit this link> to listen to the recordings and read the write-ups of all our live sessions since April 2021.