Olojede: SMEs Require Proper Bookkeeping to Attract Loans

The Head, Emerging Businesses, Access Bank, Mrs. Ayodele Olojede, in this interview, speaks about the bank’s commitment to operators in the micro, small and medium scale enterprises. Nume Ekeghe brings the excerpts:

What is your bank doing to support the development of MSMEs and make it easier for them to access loans?

One of the things we are trying to pursue this year is our support for MSMEs through loans. We don’t pay lip service to our love for MSMEs. To show the extent of how much we want to support them, we have also invested significantly in our understanding of the risk variables and factors in that segment. In the last three years, we have incrementally supported MSMEs.

In 2018 alone, we granted up to about N37 billion as new loans to 11,000 SME customers which even won us awards both locally and internationally. We were able to achieve this feat because we introduced an innovative approach to lending. And with this, all that the customer need to access a loan is just for them to be able to keep a good credit record and a good sales record. We do not ask you for an arm and leg. So, if you keep those two records, you are guaranteed to be able to access our loan. What we do is that we work with the type of asset that you have, and then we leverage the National collateral registry. And I make bold to say that, it is only Access Bank in the industry that is currently using the National Collateral Registry in support of MSMEs.

So, with the innovative method that we introduced, even customers who do not have a business registered, were able to access loans because what we do is to work with our partner lawyers to be able to get their businesses registered. And once that is done, they are able to get a loan from the bank. And from the number that I highlighted earlier, in terms of volume of loans we have granted to MSMEs, 30 per cent of that amount was used to support women through our flagship ‘W’ initiative. In fact, what we have done with the W-Power initiative is such that, if you own 50 per cent of your business, you can get the loan at 15 per cent per annum.

And then to be able to encourage other women to own businesses that are not at the stage of 50 per cent shareholding yet. Between 40 and 49 per cent, we will give you two basic concessions from the regular interest rate that we charge our customers. Between 30 to 39 years, also, you get one basic point concession. But anything below that, you will be charged at our regular price. We are also planning to expand our footprint to health, education, and technology. For the health sector, for instance, we have a partnership with Medical Credit Fund, and through that partnership, we are able to grant loan up to N3 million collateral-free. And for education as well, we give collateral-free loan of up to N10 million specifically for working capital purposes, such as buying school uniforms, laboratory equipment, books, etc.

We are also expanding our footprints in the technological sector as well. Even the recently re-introduced creative sector loan, we are currently at the forefront of pushing that and we are about the only bank that has even submitted applications to CBN.

Despite all these intervention, MSMEs still lament the inability to access loans, why is that so?

One of the factors that we have discovered is the reason for high loan decline. It’s not necessarily because banks do not want to support MSMEs with money, but there a lot of other criteria that you have to look at. For instance, if you want to take money from the bank and you do not have or you are not able to demonstrate the managerial confidence that is required to sustainably run that business for a while, you may not likely get that money. So, the point here is that there are funds that concessionary rate is as low as nine per cent and we are even saying we are going to be flexible with our collateral requirement. But then you still find that some customers would still not be able to access finance from in banks because of some certain things that are required on their own part. And one of such is the need for you to be able to keep your records like I earlier pointed out. That is because we would be asking for those when we are not emphasising or overly demanding of collateral.

Your bank used to be keen on capacity building for MSMEs, is that something you still do?

At Access Bank, we believe that it is one of the areas where MSMEs require supports and we have various workshops. Our team just came back from Jos where we had a workshop on how to be able to leverage social media platforms to boost sales. It is very important that the MSMEs are able to sell the products that they produce so that they can pay back the loans. So what we aimed at doing was to give them an expository training on digital platforms as different from the traditional methods of selling. So, we are trying to expose them to all of those platforms to help them to be able to sell beyond the proximity of their location.

Another thing that we also do very well to be able to help our customers is that we organise MSME clinics. And these are one on one engagement. Typically, what happens is that the consultant would ask key questions around areas where you are struggling, and then they would be able to proffer solution to help you through them. We have been doing this now for many years. Last year, we were able to successfully engage 11,000 customers. So far, by this half year already, we have done about 12,000 from our 30,000 target for this year. With this, we are helping them with their finances, business management practices, helping them with understanding alternative methods of how to be able to sell their businesses and also supporting them with loans.

You said you granted over N37 billion in loans to SMEs, how much did you grant the previous years?
The years before, it was about N22 billion to 8,000 customers.

How long is a customer supposed to have a relationship with Access Bank before benefiting from its loans?

The way we think about MSMEs has typically gone beyond the traditional ways banks used to look at them and engage with them. When I talked about keeping records, I didn’t mean keeping records with the bank. What I meant was that, if you are a business owner, do you have your sales records? When you buy your stocks, do you keep records of what you bought and how you are selling them? So when I come and ask you, how much have you sold today, you not only able to tell me, you are also able to show me. And then i can see what you have done for the past three or six months. That is discipline. Now, if the bank wants to lend money to Cadbury for instance, the first thing they are going to ask of is their financial statement.

So what I am saying is that, where is your own financial statement as a business owner? Possibly, what we would be seeking to see from the bank is that you are also depositing your sales proceeds to that bank. Hence, we can give you a loan even when you are not our customer. What we only require is that you keep the money in a bank. And what we are trying to ensure by so doing is that you participate in the formalised sector. So if you wanted a loan from us today, without having an account with us, we can give that to you provided, you were able to present your business records and bank statements and you still can get a loan. But of course, you would still have to open an account with us where the money would be credited into.

Earlier you said your bank is expanding its scope to support education, health and IT, why not agriculture, and what sort of financing is available to MSME players in those sectors?

We have a dedicated team that handles every agricultural transaction, they don’t sit with my team and that was why I didn’t talk about it. But as a bank, agriculture is one of the sectors we are also focused upon. Generally, all our solutions are tailored through what a client would require. So if it were an equipment purchase, you want to expand your business, etc, we would be able to support you in that line, and they are all collateral-free. My emphasis is more on those facilities we give out collateral-free. Because collateral is a major challenge in accessing finance to a lot of MSMEs. So, we have been trying to be creative around how we work with them.

So if you asking for facility of about N50 million or N100 million, then it is a different type of assessment that we would be requiring. We a biased about women, so our flexibility for women in terms of a collateral-free facility is up to N4 million. Generally, it is about N3 million. Remember I mentioned our partnership with Medical Credit Funds, in the health sector, and that enables us to be able to give collateral-free loans to up to about N3 million. But under that program, we can actually lend up to N350 million. This thing about gender is all about empowering women to be able to do more in business.

You mentioned earlier that you are the only bank using the collateral registry, why do you think other banks don’t trust the collateral registry enough to leverage on it in giving loans. What has been your experience in leveraging on it, and what its opportunities for us as a country?

I think it starts with what your focus is as a bank. So if you are not focused on MSMEs as a sector, you are not necessarily required to use the National Collateral Registry, because there is a different registry for every other type of loans. So, at Access Bank, because we are deliberate about our support for MSMEs we are also leveraging all of the infrastructure that have been provided.

And so, the National collateral registry just allows us to be able to register moveable assets. And the way the register works, we have some unique identifiers that, if you go to another bank, they are supposed to be able to know that you have pledged those assets. So that is supposed to protect us. So as an organisation, if you are not focused on this particular segment, then you may not have a need for the registry. And that is why I said what I said because a lot of banks would claim to be playing in that segment, but then, can they boast of some of the achievements that we have, and can they do it the way we do it at Access Bank? Not necessarily.