EMPOWERING SMES FOR A RESILIENT FUTURE

Small and medium enterprises (SMEs) are the backbone of our economy, particularly in Kenya, where they account for 90% of businesses and employ 80% of the workforce. Despite their vital role, many SMEs face significant challenges that hinder their growth and stability. There is   therefore an urgent need for targeted financial support and capacity-building initiatives to enhance their resilience and ensure a sustainable future.

Financial institutions are crucial in providing SMEs with the necessary tools to navigate these challenges. By focusing on innovative solutions and enhanced service delivery, they can help SMEs sustain their operations and adapt to changing market conditions.

Digital and financial literacy 

The rise of technology presents an opportunity for financial institutions to streamline processes and enhance customer experiences. Digital banking solutions, like Equity’s EazzyBiz, empower SMEs by facilitating access to credit, enabling cash flow management, and simplifying payment processes. These innovations allow for multiple transaction approvals and enhance security through features like One Time Passwords (OTPs), ultimately saving SMEs time and resources.

Another innovative solution offered to SMEs by Equity is Ecosystem Banking. A financing concept that has transformed lending to focus more on cash flows and has provided financial solutions to the entire value chain connected to an anchor corporate or business. SMEs that populate a stable going concern ecosystem can be offered solutions conveniently at affordable rates and repayment. The need for collateral is minimized as the focus is more on cash flows and how to ring-fence the same. While banking the SME is important, lending support to their entire ecosystem of suppliers, distributors, and other service providers within this chain has proven beneficial in securing the future of SME financing.

For instance, a farmer supplying products to an SME firm and needs money to harvest can walk into Equity and use their contract with the said SME, which in this case is the anchor client, to get a quick loan to enable them to meet their obligation. This way, the SME will not be cash-starved for lack of material, nor will the farmer strain financially.

Partnerships and trade financing solutions 

Equity has formed strategic partnerships with organizations such as the International Finance Corporation (IFC) and Mastercard Foundation to provide targeted support to SMEs in various sectors, including agriculture, trade, and manufacturing. These collaborations enhance access to affordable loans and flexible financing solutions, crucial for SMEs reliant on international trade.

SMEs also form a large share of exporting and importing enterprises as they rely on international trade for raw materials and as markets for final products. This means that they are the initiators or recipients of international money transfer and banking.  With the current trade financing solutions, SMEs can now grow into new markets, get new certifications, expand their workforce, and make sustainable improvements. Equity is a one stop shop for all international money remittances like Western Union, MoneyGram, Transfast, Ria Money Transfer, and HelloPaisa among others.

Equity’s trade financing solutions such as bank guarantees, bid and tender bonds, LPO financing, invoice discounting, import and export collections, pre-shipment financing, letters of credit, and post-import financing have seen SMEs improve turn-around time and boost their supply chain financing, and also PayPal where SMEs can get payments directly into their accounts, hence saving them time and crucial resources to their day-to-day activities. Currently,  the bank  offers an unsecured bond with an increased limit of upto Kshs. 10,000,000 per bid bond, for tenders and contracts, processed in under one  hour.

To facilitate international trade, there needs to be forex exchange. Equity branches are bureau de change centres for its customers, while those who regularly need to transact using foreign currency can sign up on the EazzyFx platform. Equity’s online forex trading platform gives SMEs and corporations freedom and control over their trading and saves them time since they trade real-time from their offices by logging into the trading platform. The trading platform seeks to tap into the potential of the financial markets in Kenya by offering a seamless experience in trading digitally, eliminating the need for physical or phone transactions. It also allows access to reasonable prices on both emerging markets and major traded currencies. Among the service’s key features include real-time streaming access, competitive market pricing, and immediate, tailored request-for-quotation facilities. Insights on all trades and deals are also available.

Training and capacity building 

Beyond financial support, training in financial literacy and entrepreneurship is essential forempowering SMEs. Equity collaborates with various organizations to provide mentorship and training, equipping SME owners with skills in financial management, marketing, and digital literacy.Equity Group Foundation has offered customized capacity building programmes to 570,006 micro and small enterprises (MSMEs) that received entrepreneurship training, with a total of Kshs. 355.4 billion disbursed to 305,771 MSMEs under the Young Africa Works Programme, fostering financial inclusion and access to credit. This programme  has created at least 1.3 million jobs for young people.

As the business landscape evolves, the future of SME financing looks promising, bolstered by ongoing technological advancements and supportive government policies. The African Union’s commitment to the Africa Continental Free Trade Area (AfCFTA) presents exciting opportunities for SMEs to expand their markets. By positioning itself as a regional leader in SME support, Equity aims to facilitate cross-border trade, creating job opportunities and strengthening the economy. Empowering SMEs today will secure a more resilient and prosperous economic future for all.