Gov’t asked to Collaborate with Banks in Financing SMEs

Government has been asked to collaborate with development banks if it is finance and develop Small and Medium Enterprises.

Speaking at the 7th edition of the Africa SME Champions Forum at Speke Resort Munyonyo under the theme: “Recovery and Growth”, Sidi Ould Tah, the managing director Arab Bank for Economic Development in Africa (BADEA), said I nly 20% of SMEs have access to finance due to perceived risks that SMEs may not meet their financial obligations and still some die in their first year of startup.

He said there’s need for collaborations between Development banks and government’s if SMEs are to benefit, noting that most commercial banks are focused on making profits, which is not the case with development banks .

The group chief executive officer, Africa Guarantee Fund, Jules Ngankam said that development banks are there to ensure small and medium enterprises growth rather than commercial banks that focus on profit making.

Patricia Ojangole, the managing director of Uganda Development Bank (UDB) said they have put in place tailored programs that will see SMEs transition from small to large enterprises.

Ojangole, revealed that SMEs play a vital role in Africa’s economic development, adding that they provide 70% of jobs created, over 60% of the continent’s GDP and they are an engine for transformation and innovation.

At the same event, BADEA revealed that they had extended funding at a tune of USD 20 million (76 billion) to UDB, where, $10 million (about Shs38b) will be used to finance eligible import transactions from the Arab countries and $10 million will be used to finance eligible private sector projects for the benefit of borrowers within Uganda.

He noted that as BADEA, they have partnered with UDB which can reach to SMEs directly, since they (BADEA), can’t reach every Ugandan.

Commenting on the fund, Ojangole said this will go a long way in financing SMEs, mostly those termed as un-bankable.

She noted that most of the SMEs are being turned away by banks because they’re not bankable. However, she said as UDB, they have embarked on training the SMEs on how to access finance, good record keeping, among others.

Ojangole added that over 1000 SMEs have been trained, and those with good business ideas, have been funded.

The event brought together over 300 of Africa’s top SMEs, institutional funding organizations, venture capitalists, angel investors and ecosystem builders.