IIA Holds Access To Finance Info-Session

Access to finance remains a big challenge for SMEs despite the existence of many financial institutions such as banks, saccos and other informal forms of lending.  

The appetite for financing remains very high, however, this does not translate to the easy availability of money.  This is because many SMEs are seen to be risky, unbankable and lacking the capacity to effectively absorb and use financing. On the other end, high-interest rates, rigorous screening procedures and poor credit scoring among others are some of the hurdles facing SMEs.  

This is why Invest In Africa and Stanbic Bank held access to finance info session which aimed a developing a common point of view for the SMEs and Banks to work harmoniously.  

Some of the key outputs from SMEs on APP was that there is a need for financial literacy training to build capabilities of SMEs as they seek financing.  Additionally, banks should create a ‘safe space’ that is SMEs responsive as opposed to a generalized approach to serving business customers. This is through giving a ‘humane-face’ to banking processes. People to people connections made SMEs trust banks more. An example was given by one of the SMEs who has moved across seven banks in Kenya because he trusted the individual more than the banks themselves.  

It also became apparent that SMEs do not fully understand the various financing facilities offered in detail and only come to learn of them after they have passed. Additionally, the LPO financing model remains a big challenge for SMEs.

It was therefore agreed that IIA and Stanbic would purpose to create a tailor-made product to meet the current and projected needs, especially around trade-financing. This could be done with some of the Buyer partners to ensure that ring-fenced opportunities are easily financed.  

Secondly, capacity building initiatives should be activated to boost financial literacy for SMEs on APP and those on Stanbic bank’s network to ensure that they are financially sound.