Heritage bank tasks government on SMES, diversification

The Small and Medium Scale Enterprises, SMEs have been described as very strategic and critical to Nigeria’s economic growth. Mr. Davidson Regha, General Manager and Divisional Head, Retail & SME Banking of Heritage Bank Limited, who spoke with journalists in Lagos on Wednesday, also urged the government to hinge the planks of its current economic diversification on a massive support for the SMEs as it was being done in many developed countries.

“For many of the developed economies we see today, they all have SMEs as the support base of their big corporations, whether in America, Europe, Latin America or Asia. That is the way to go as a country. If we do not support the SMEs, the economic growth we are all talking about will not happen. We should see the SMEs as the catalyst to change and economic growth the government is talking about, Regha said.

Regha, an associate of the Chartered Institute of Bankers in Scotland and Nigeria; an Alumnus of the Lagos Business School (LBS) also submitted that  the SMEs, being a critical sector of the economy deserve the support of banks and every institution of  government because it is the engine of the nation’s economic growth.

Quoting from the National Bureau of Statistics (NBS), Regha stated that SMEs contribute about 48 per cent to our national Gross Domestic Products (GDP) which also translates to about 48 per cent of the total labour force in the country.

He disclosed that SMEs are part of the vision and corporate strategy of Heritage Bank to build and transfer wealth across generations. “If you focus on the SMEs, it means you have to meet with entrepreneurs at the incubation stage of their business. And if you are to help them grow and become very big and successful, that means you will be able to transfer wealth from one generation to the other,” he said.

According to the Heritage Bank Chief, banks should continue their support to the SME sector because the business of banks is to manage risks. “If you say dealing with the SME sector is very risky, which is why a lot of institutions are very apprehensive, I would agree with you, banks are set up to manage the SMEs to reduce their risks and make them good and successful ventures.”

He noted that the major ways that banks can help the SMEs include helping them put a structure in place, providing advisory service and mentoring them. According to Regha, the greatest challenge the SMEs are facing in Nigeria is not just lack of proper funding or capital; but lack of structures.

“For us at Heritage Bank, we try to de-risk them and put structures in place for them. If there is no structure, you will see a man who has done business for ten years and if he is not there anymore, the business dies. As a matter of fact, we de-risk these businesses by taking away the human wastes that exist in their environment, which ensures that the business runs with or without the owner,” he maintained.

To stem the mortality rate of SMEs in the country, Regha disclosed that his bank last year, established a SME Clinic, which is like a laboratory where the bank invites the SMEs to the clinic and put them through basic business training and strategies like book keeping, account keeping and how to put structures in place to separate the business and create functional units and establish proper division of labour that will help the business.

To drive this further, he said the bank has also set up the NYSC graduate Scheme, which according to him, is another platform the bank is using to create gainful employment. “It is actually a scheme for the NYSC for which we have earmarked N200 million to assist Nigerian graduates with brilliant business ideas. We have set up centres all over the country to drive this scheme. The beneficiaries emerge from a competition that is organised for people at that level and the person or group of persons with the most brilliant ideas get funding from Heritage Bank,” he said.

Regha challenged the private sector to step up its game in the fight to reduce youth employment in the country, since according to him; government has business in creating employment.

He also disclosed that his bank is using the agency banking model as a financial inclusion strategy to reach the unbanked segment of the society. “The agency banking is a project that the Central Bank of Nigeria (CBN) actually conceptualised to bring the financially excluded segment into the banking system. We have set up our agency network and we are using technology. We are also looking at about 2000 agents before the end of the year and we are targeting rural areas, where customers can deposit money, withdraw money buy airtime, pay bills among others,” he added.