Zenith champions ‘true banking’ for real economy, MSMEs

Zenith Bank has reaffirmed its commitment to the real economy, as evidenced by a slew of measures geared toward empowering Micro, Small and Medium Enterprises (MSMEs) in the country, a move which it describes as ‘true banking’.

This renewed dedication was announced by its Managing Director and Chief Executive Officer, Henry Onwuzurigbo, and comes on the heels of a strategic partnership with the Africa Guarantee Fund (AGF) which has the goal of unlocking these crucial businesses’ full potential. “MSMEs are not just numbers; they are the lifeblood of our nation,” Mr. Onwuzurigbo said while addressing a gathering of stakeholders during a signing ceremony at the Bank’s head office in Accra.

He emphasised their substantial contributions, citing statistics that showcase the segment’s role in employing over 80 percent of the workforce and generating more than 70 percent of private sector output. Additionally, he highlighted initiatives aimed at supporting women-owned businesses and environmentally friendly enterprises, showcasing a dedication to fostering both gender equity and sustainability.

Mr. Onwuzurigbo chronicled some historical and ongoing demand-side and supply-side challenges faced by MSMEs, particularly in accessing finance. “Several reasons have been proffered for this financing gap. Financial services providers readily attribute their risk aversion stance for not lending to MSMEs to demand-side constraints, which include lack of managerial capacity, inadequate collateral and poor record-keeping, among others,” he explained.

Further, there are supply-side issues such as high transaction costs and limited understanding by some service providers of MSMEs’ nature and operations. Other constraints plaguing the MSME sub-sector in Ghana include infrastructure deficit (including power and transport), weak intellectual property protection and contract enforcement.

The Zenith Bank boss highlighted his outfit’s existing initiatives to address these issues, including dedicated MSME accounts, ongoing partnerships and training programmes to equip entrepreneurs with crucial financial literacy and business management skills.

Step Up

However, announcing the partnership with AGF marks a significant step forward. This collaboration, Mr. Onwuzurigbo emphasised, will act as a ‘catalyst’ by providing innovative solutions to address the financing gap and facilitate easier access to credit for countless businesses. This will open doors for countless entrepreneurs, fostering economic growth and job creation.

Underscoring the bank’s strategic focus, Mr. Onwuzurigbo outlined their commitment to key sectors aligned with the nation’s development goals, such as building & construction, manufacturing and trade.

This development resonated deeply with stakeholders present, who recognised the transformative potential of this partnership. They joined Mr. Onwuzurigbo in his call for collective action, with entrepreneurs and investors asked to join hands in the journey. “Together, we can be the driving force behind the success of MSMEs and realisation of Ghana’s economic potential,” the Zenith Bank MD/CEO added.

AGF commitment to MSMEs progress

African Guarantee Fund, in its first agreement with Zenith Bank Ghana, is pioneering a landmark partnership aimed at bolstering SME lending activities in the country. This collaboration marks a significant stride in fostering economic growth and empowerment within Ghana’s vibrant SME landscape.

Bendjin Kpeglo, AGF West Africa Managing Director said: “This partnership is a significant stride in our mission to drive sustainable economic development through our guarantee facilities to increase Zenith Bank Ghana’s financing of MSMEs in Ghana”.

Substantial support for women

The partnership leverages African Development Bank’s Affirmative Finance Action for Women in Africa’s (AFAWA) Guarantee for Growth programme, which aims to unlock up to US$3billion in financing for women-led small and medium enterprises in Africa through financial institutions.

A substantial portion of the risk-sharing mechanism will offer women-owned and women-led businesses discounted loan pricing and increased guarantee cover, along with technical assistance support, to help reduce the gender finance gap in Ghana. This aligns with Zenith Bank Ghana’s commitment to financial inclusion and gender equity.

Driving sustainability

The partnership also recognises the growing importance of sustainability. Businesses operating in green sectors such as renewable energy, eco-tourism and sustainable agriculture will benefit from increased financing backed by AGF’s Green Guarantee Facility, demonstrating both institution’s commitment to environmental sustainability.

Beyond financial support, Zenith Bank Ghana and AGF are committed to empowering MSMEs with the knowledge and skills they need for developing capacity to expand their business. They will collaborate to offer training workshops on financial literacy, business management and sustainable practices. These workshops will equip MSMEs with the tools needed to navigate the market effectively, make informed decisions and operate their businesses efficiently.

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