Supporting SMEs in Africa
Standard Bank Group (SBG) estimates that there are more than 55 million self-employed people across the countries in which the group operates. Standard Bank Africa has found a culture and way of doing business on the continent that does not require the traditional approaches to small and medium enterprise (SME) banking and financing, rather opting for an approach that delivers propositions that are scalable and profitable, both for the bank and our customers.
SMEs are not immune to changes in the political and economic environment. Some of the challenges faced in 2012 included significantly higher inflation and interest rates, which heavily impacted the cost of doing business, cash flow and cost of credit. As many African countries are import-reliant, many SMEs have pursued trading in imported consumer goods. This has made them vulnerable to currency fluctuations, which not only impact their business but have wider implications, such as the unpegging of the Malawian kwacha from the US Dollar which resulted in a 34% devaluation of the currency and subsequently a fuel and food shortage.
The SME market requires simple banking solutions with convenient banking hours and close proximity to bank branches. In addition, our SME customers require banking relationship managers to advise them on financing and banking, and guide them through the lending application process.
Standard Bank Africa provides financial services to more than 181 000 SMEs across 14 countries in Africa, excluding South Africa. We have a dedicated SME business head in each operating country and more than 400 relationship managers across Africa dedicated to servicing our SME customers. Each SME customer has access to a dedicated relationship manager, irrespective of the size or life stage of their business. During 2012, we appointed our first relationship manager in Juba, South Sudan, and introduced SME-specific training programmes to further upskill our employees so that they effectively meet the needs of small business owners.
Facilitating access to financing and banking services
We recognise that the SME market is not homogenous across all countries in which we operate and we have adapted our product, sales and branch approach to allow for greater flexibility to meet local demands. We have continued our efforts to make banking simpler for SMEs by reducing account opening requirements, shortening application forms and reducing our turnaround times for account opening and lending applications. Where feasible, we deploy Customer Service Points - SME-focused branches in informal trader markets - to provide greater convenience and reduce the risk of transporting cash in congested informal business areas. More information on this can be accessed at the Our distribution network. We have also continued to improve our fraud prevention initiatives and loan collection capabilities.
In 2010, Standard Bank Africa implemented innovative technology to overcome the traditional challenges of assessing risk in the SME market, essentially aiming to determine whether the SME has the willingness and ability to repay the loan. Subsequently in 2011, we launched SME Quick Loans, an unsecured short-term working capital loan product which requires no collateral or financial statements. It is aimed at unbanked and underserviced SMEs, particularly women entrepreneurs, providing loans ranging from USD300 (R2 462) and USD30 000 (R246 223) repayable over periods ranging from three to 12 months. The loan disbursement process takes three days and the application forms consist of two pages. The pricing of this product is about half of what is charged for similar loans in the market. SME Quick Loans enables us to serve informal businesses and offer a differentiated proposition to the wholesale and retail trade sector across many African countries.
During 2012, we expanded SME Quick Loans to an additional six countries. The offering is now available in Botswana, Ghana, Kenya, Lesotho, Malawi, Namibia, Nigeria, Swaziland, Tanzania and Zambia. To date, we have disbursed more than 20 069 loans totalling around R1,1 billion. Since the launch of this product we have learnt that the majority of SMEs repay working capital loans faster than we had expected and that repeat working capital facilities are needed. This has enabled us to build our SME finance capability and a key focus area for 2013 will be to introduce a seamless transitional offering between SME Quick Loans and traditional business finance solutions.
In 2011, we introduced a value proposition for traders in informal markets in Tanzania, offering services such as transaction accounts, loans, insurance, trade finance and foreign exchange solutions. In addition, we simplified account opening forms and reduced account opening turnaround times. In 2012, we successfully replicated this proposition in Malawi and Uganda which has been well received. Plans are in place to launch the trader proposition in Ghana, Kenya, Nigeria and Zambia in the near future.
In Nigeria, Stanbic IBTC Bank launched the SME Bundle Account which reduces the cost of banking for SMEs and provides our customers with a clear idea of banking charges, allowing an SME to price its own products and services optimally. The price plan offers a combination of free value added services such as a debit card, SMS and email alerts on account activity, Internet Banking, bill payments on Stanbic IBTC Bank ATMs and Internet Banking, and the first cheque book for free.
During 2012, Stanbic Bank Zambia launched the Tamanga Account, a simple but cost effective transactional solution specifically designed for Zambian SMEs with limited or no access to financial services. The account is easy to open and provides clients with a free debit card and access to a discounted fee structure, unsecured working capital loans and branches in trader markets.
We have continued working with the Pan African Business Coalition on HIV/Aids to offer the three-day BizAIDS skills training programme to SMEs across six African countries. BizAIDS is a training programme designed for micro, small and medium-sized business owners and informal traders who normally would not have access to business skills training, nor HIV and health-related workplace programmes. The programme focuses on building a healthy business and promotes access to financial services through an interactive and multi-topic approach. It is flexible enough to use in both rural and urban areas and training is provided by facilitators drawn from local communities who are trained by BizAIDS master trainers. To date more than 1 378 SMEs have received training in Ghana, Kenya, Malawi, Nigeria, Tanzania and Zambia.
In Lesotho we participate in the Partial Credit Guarantee Fund initiated by the Ministry of Finance and Development Planning. Stanbic Bank Zimbabwe has established the Wealth Creation Fund (more information can be found at Transformation) and Stanbic Bank Uganda supports the Youth Venture Scheme of the Ministry of Finance, Planning and Economic Development. These initiatives aim to develop youth entrepreneurs and facilitate job creation.
Stanbic IBTC Bank has been selected by the Federal Government of Nigeria as a fund custodian for the Youth Enterprise with Innovation in Nigeria (YouWIN) Programme. The programme is designed to provide grants to young entrepreneurs who successfully complete a business plan competition and learning camp. Stanbic IBTC Bank also partners with the Enterprise Development Centre of the Pan African University to support SME development.
Case study: SME Quick Loan facility
Extract: Naomi Githaka started her career as a second-hand clothing retailer ten years ago. The growth of her business enabled her to become a wholesaler seven years ago. In 2010, CfC Stanbic Bank approved a SME Quick Loan facility of Ksh1 million (R97 194). After three months her business had increased to such an extent that she required an additional Ksh2 million (R194 387).
Case study: Kariakoo Trader proposition
Extract: Banking institutions have long been sustained by large companies, employees and government workers as their customer base. But the 21st century brought with it innovations that have seen a steady growth of entrepreneurs, especially in Africa. In 2011, Stanbic Bank Tanzania launched a targeted and focused proposition aimed at importers, wholesalers and retailers in the Kariakoo market area.
- Supporting SMEs in South Africa.
- Agriculture financing.
- International trade propositions for SMEs.
- Our distribution network.