enterprise development
SMEs: funding is
not enough
Access to bank funding is not the silver bullet that will ensure the success
of small and medium enterprises (SMEs) in South Africa.
B
anks and all relevant public sector organisations will
have to deepen cooperation to help small businesses
tackle challenges that go beyond access to funding.
South Africans have mainly focused on an
argument that banks are not adequately funding
SMEs, overlooking other challenges that these enterprises face.
Part of the criticism has been that banks are not prepared to fund
small businesses that do not have collateral as surety.
‘A well-funded business without a market is no business at all.
While a common perception is that the biggest challenge facing
SMEs is due to lack of funding, it is our experience that access
to markets and non-financial support is as crucial to sustainable
business growth,’ says the Johannesburg based Barclays Africa
Group, previously known as Absa.
‘We believe that we need to be part of job creation and driving
economic growth. Our point of departure is that money alone will
not solve the problem.
‘It is no secret that 80% of new businesses fail. If financial
institutions want to play in the development lending space, they
cannot simply push money along and hope for the best – they
have to go beyond their traditional services and facilitate business
support and access to markets for new enterprises.’
A glimpse into the role that South African banks have played in
supporting SMEs illustrates how they have gone beyond lending.
Enterprise development centres offering advisory solutions have
been set up by banks to help small businesses.
FNB recently launched an initiative that will ease the
administrative burden faced by some small businesses. Owners
of these small businessess tend to be sidetracked by bureaucracy
rather than focusing on business, something that poses a risk to
their enterprises.
To deal with these challenges FNB recently launched
a partnership with the Competition and Intellectual Property
Commission (CIPC). This partnership created a mechanism for
small businesses to open a business account and register their
business with the CIPC on a single platform.
‘Our customer insights constantly reveal that start-up businesses
are plagued by onerous administrative efforts’ says Sanjeev Orie,
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BANKER SA
Edition 9
Subbed Banker SA Financing SMEs article.indd 12
2013/10/15 12:11 PM