First Bank goes hinterland to support SMEs
After recording success in its engagement with Small and Medium Enterprises (SMEs) across Nigerian cities, Gbenga Shobo, executive director, retail banking, South, First Bank of Nigeria Limited, in this interview with Hope Moses-Ashike, says the bank has decided to locate and address the funding challenges of this sector in the hinterland. Excerpt:
Banks’ sudden interest in SMEs
The formal sector of the economy is getting bigger. A lot of our graduates come out and they have no jobs. So, a lot of them are taking initiatives and starting businesses themselves. One area that it growing now is IT, online retailing. We have Konga today, which we didn’t have before and people are buying online. A lot of banks are taking it serious because that sector is growing and it is a very large sector of Nigerian economy.
The N220 million MSME fund launched by CBN
It will help, but it is just a drop in the ocean. The major problems of SMEs are access to finance. You come out there and you want to do business and nobody is ready to help. So, the answer is yes, it will help but what we need more is what the banks are doing now, getting more interested in it, understanding the SMEs themselves and creating products that will be useful to them. So that they will be able to access these finance and achieve their goals.
Monetary policy that will help banks support SMEs
What really helps SMEs is access to finance. Another important thing is capacity – understanding how to run the business. Getting money is not just important, you must be able to use the money and get profit. In First Bank for example, we have done a lot on capacity building, where we bring SMEs together and teach them fundamental things they need to know. Monetary policy is tight right now and that is for good reason, which means you must judiciously use whatever you have. More than monetary policy, we need an environment where the SMEs can thrive and where we can grow them, give them more understanding of what they are doing and give them money. The CBN intervention is good. We need more intervention, not only from the central bank, also from the Ministry of Finance.
Public private partnership
The way it helps is more of guarantees. If the public sector of the government agencies can do guarantees for them it can help. I can take the risk, if the government guarantees the fund.
So, I am saying PPP can work, we need to get the target initiative rather than just dishing out money.
Targeting IT sector in your SME programmes
The IT is one of the areas we want to focus in and we are strong in education now. We have given out some loans to primary, secondary and tertiary institutions. IT retailing, which is the new one, which include the Konga, Jumia is the area that is growing and we are partnering with them. We have always been traditionally strong in agriculture, manufacturing and trade. We have been talking with some of the international organizations on where we can get support on healthcare right now. You can’t just but in into one area because SMEs are well diversified, so wherever we find you and your cash flows and businesses are good, we will be able to support you.
Amount disbursed to SMEs so far
We have disbursed about N46 billion on SME alone, last year. But on education, I can give you the figure also.
2013 conference
The conference last year was very useful and very successful. What we achieved basically was to attract the real SMEs since it was an online registration. At the conference, we brought about three to four successful SMEs to address them. One of them that started a furniture company, he is now a big company; Konga, someone that started a small online shopping is now big; a music producer is doing well. We went across the whole range of SMEs, and called them together to address these people. They gave the SMEs hope that they can do it and also allowed them interact with us, tell us what the issues were, so we can help. It helped us as well to twist our products and services in that way.
More conferences
What we have actually done is to limit the number of people that come just to Lagos. We have held the conference in Aba, Port Harcourt, Kano, and Ibadan. So we are now moving hinterland to gather more SMEs to give them capacity building. What we do in the regional conferences is capacity building. We are teaching them what they need to do in their business, so that when you get to the bank, they will get money, and that makes them bankable.
First Bank unique selling point
When you get to any First bank, you will get a manager that can talk to you about your SME business. Secondly, we also have products keyed specifically to the SME, access to finance and more security.
Interest rate
When there is a tight monetary policy, interest rate will be low and there will be less money to move around. The problem with even research is access to finance. If you have the money, you can negotiate on rate later. With the money, you can now have a track record on what you have successfully done.