It is often said that SMEs are the backbone of the Kenyan economy contributing to job creation and economic growth. As a matter of fact, the Kenya National Bureau of Statistics (KNBS) indicates that MSMEs account for over 80% of employment in the country and contribute approximately 40% of Kenya’s Gross Domestic Product (GDP).
Despite their importance to the Kenyan economy, SMEs have for the longest time been treated as an unwanted child in the financial sector. This is because they don’t fit into the image of an ideal customer who has all their ducks in a row from having the right paperwork and even collateral.
However, the tide is turning slowly but surely with banks like NCBA starting to recognize that indeed the SMEs sector is the next growth frontier.
As we celebrate World SME Day, here are some of the things that I wish banks would know about SMEs.
Speed
As SMEs, we find that most banks take their time in approving and disbursing loans. In as much as we understand that it is good to be cautious, at times some of the opportunities that we get require speed in disbursing loans. A good example of this is a bulk order to supply or even a tender which means that one does not have the luxury to wait 30 days for funds disbursement.
Partnership
Essentially, SMEs are not just looking for someone to fund their businesses but someone who not only believes in their dream but also sees their potential. A partner who is willing to walk the journey with them in the good times and the bad times. One who is happy to see them succeed and grow into the next level.
Also, one who is willing to help us learn the best way to our businesses because. This is because as we grow, that will mean that we will need more financing which creates a win-win situation for everyone.
Cashflow is King
A good number of SMEs grow from small outfits such as kibandas to become sizeable businesses with good turnover. However, one finds that in as much we are cash rich, we don’t have collateral which is preferred by most banks.
This, however, does not mean that we are high risk but that banks just need to understand that we operate within cash cycles. Which if they took time to understand we can have a good working relationship.
Paperwork
In as much as we understand that paperwork is central to banking, truth be told it is frustrating to us SME owners. In order to qualify for any facility, one has to fill out mountains of documents and fill out numerous forms. How I wish that banks could find a way to automate some of these processes which would save us a lot of time which could be used to generate more business.
In as much as we appreciate the strides that the banking sector has made in improving their SME Banking offerings. As a small business owner, I still feel that there is still a lot that can be done to improve how this key sector is perceived and dealt with in a bid to ensure that we become partners in the growth of our economy.