Commercial banks advised to look East in supporting SMEs

06May 2016
Victor Karega
The Guardian
Commercial banks advised to look East in supporting SMEs

TO better serve small and medium entrepreneurs (SMEs) in the country, commercial banks have to look to Asian countries which have succeeded in providing efficient services to the group.

Permanent Secretary, Ministry of Industry, Trade and Investment, Dr. Adelhelm Meru addressing NBC Bank customers at the launch of the bank’s business banking proposition in Dar es Salaam.

Permanent Secretary in the Ministry of Industry, Trade and Investment, Dr Adelhelm Meru said on Wednesday night that SMEs require innovative and facilitated services to meet their needs.

The knowledge of business people in that bracket, he said, is limited in terms of preparing business proposals which are eventually a requisite for all commercial banks to facilitate loans.

“Our banks need to continue to learning and gaining experience from countries which have succeeded in providing services to SMEs, especially in the Asian continent.

“This continent has made significant leaps in the area of credit facilitation for small and medium entrepreneurs,” he said when inaugurating the National Bank of Commerce’s (NBC) Business Banking proposition in Dar es Salaam.

Dr Meru pointed out that Tanzania has about three million entrepreneurs, who require growth capital, but it is not easy for commercial banks to do this yet they have to find ways to make this connection possible as it is the lifeline of the private sector.

This is perhaps the only way to create sustainable growth and a modern economy, according to him. He said that a range of solutions suitable to the economy must be worked out to establish this link.

He said a major problem facing SMEs is lack of capital to grow their business, saying there is a need for focused funding mechanisms for SMEs that can diversify and pool risks and really know their client base.

He said stringent conditions by commercial banks used for SMEs and large scale businesspeople do not differ and at times interest rates are high.

Dr Meru challenged commercial banks to invest directly in entrepreneurs or give them loans that can be converted into equities, so that they can benefit from the upside, adding that government regulations support investing in entrepreneurs.

“Most people in Tanzania who set up businesses work on their own or with families, but if we want these companies to grow, we need to change the entrepreneurial culture to one where a company is set up with the objective of ultimately bringing in investors onboard and looking at competing at a regional level as a larger entity,” he said.

NBC Managing Director, Edward Marks said the Business Banking proposition aims at servicing commercial and enterprise customers.

The move comes at a time when Tanzania has been cited regionally as one of the fastest growing in Africa due to its economic growth and vantage geographic location.

Marks noted that the business banking segment was integral for NBC as a business as well as the country at large because it supports the growth of local enterprises, a key component for the country’s economic growth as envisioned in the Vision 2025 blueprint.

He said as a financial services provider, the bank was keen on rolling out world-class products that will enhance the customers’ business growth by not only hastening the process of bulk funds transfer locally but also in the export and business market.

“The service is designed to provide, training, trade finance, business development support plans for SMEs in order to reduce risks of business failure which often leads to non-repayment of loans as well as giving necessary direction to any entrepreneur with viable business plans,” he said.

Apart from the provision of relationship management and contact points for all the customers in this segment which is a new addition to its business banking portfolio, the bank has revamped the entire business banking bouquet spanning trade financing, asset financing and cash management solutions.

The bank will continue to focus on its customers by designing and tailoring products that will be crafted to suit their needs and aimed at creating a banking experience unlike any other.

With the revamped Business Banking proposition, NBC commits to providing the best financial solutions and value added propositions to its customers.