A statement signed and copied to the Ghana News Agency by Mr KeaObaka Mahuma, the Head of SME, Enterprise and Supply Chain Development of the Absa Group, said there was no doubt that supporting the development of SMEs could be the answer to both economic growth and job creation across Africa, where more than 60 per cent of the continent’s population was aged under 35.
According to the statement, many countries on the continent were grappling with chronic unemployment and soft economic growth rates that impeded job creation by large corporates.
However, statistics, had shown that SMEs represented a significant part of the economy as they constituted about 90 per cent of private business, more than 50 per cent of country employment rates, and made up as much as 40 per cent of Gross Domestic Product in most African countries.
“Providing financial support is easier said than done, mainly because of the challenges posed by adapting traditional lending methods to SMEs. We have found that some do not have financial records, some do not have adequate if any collateral security to access loans, while others have poor credit records,” the statement said.
Absa, the statement disclosed, was working as a responsible corporate citizen with stakeholders including governments and other corporates to innovate ways of providing funding to SMEs in a manner that is not only commercially sustainable, but, most importantly, takes into consideration the challenges already industry players faced.
With time, such solutions not only improve access to finance, but also lower the cost of financing and optimise much-needed operating cash flow for SMEs, it noted.
Absa according to the statement had created specialised non-traditional funding solutions to assist SMEs as they played a crucial role in stimulating growth, generating employment and contributing to poverty-alleviation and social development, hence why SMEs are the central focus of businesses in Absa.
“Not only is access to financial support important for SMEs, so also is market access, since more often than not, many entrepreneurs struggle to establish, let alone grow, their market presence. At Absa, we also recognise that, while it is our business and moral responsibility to promote the development of SMEs, we also have an equal task of ensuring that we help to build their business skills...,” the statement said.
The statement said Absa had introduced the “Women Empowerment Fund” to provide finance to women entrepreneurs with skills, expertise and demonstrable potential relevant to the business and industry.
The funding, it explained, was available for all women SMEs who do not have sufficient security to start their own business or purchase an existing one in terms of normal bank lending criteria.
Other funds introduced are the Development Credit Fund which offers SMEs with insufficient security to obtain credit to start or purchase existing businesses.
Absa has also committed itself to linking SMEs into the supply chains of big corporates, because major corporations spend billions in funding annually on procuring products and services from other companies, the statement said.
By linking SMEs to these companies, there is a greater opportunity for small businesses to rapidly grow after being included in the supplier base of these large companies, it added.
“As part of our Shared Growth strategy, we believe that by investing in individuals, communities and enterprises, Absa, through its various intervention programmes, is changing the African business landscape one entrepreneur at a time,” the statement said
GNA
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