Sunday, June 16, 2024

Banc ABC fosters SME growth

Failure to diversify the national economy is impacting negatively on the growth of small and micro enterprises in Botswana. This was said by Managing Director of Bank ABC Botswana, Jitto Kurian, in an interview with Sunday Standard on Friday.

He said the fact that the economy is narrowed to mostly mining, with a population of just over two million in a very big country, does not leave small entrepreneurs with much choice and options to do business. He added that Botswana’s SMEs are often forced to opt for short term contracts and compete for government tenders with their larger counterparts, which makes their operations unsustainable in the long run.

“Diversification would foster growth. For example, if there was diversification in the agriculture sector we would have industries that manufacture agriculture by-products, like tanneries. This would ensure growth in this sector. Such growth would benefit commercial banks because their growth depends on economic growth,” he said.

Another issue that he found to be a great challenge to SME growth in Botswana is that of poor financial management. Kurian said local entrepreneurs, like others in the region, often lack skills in financial management. He said it is wrong for entrepreneurs to be managers and owners of businesses as they often fail to distinguish between themselves and the business, which results in financial mismanagement. This issue, said Kurian, is what makes it easier to finance a corporation than small businesses.

“Despite all these challenges, Bank ABC is confident that one day we will create a from-rags-to-riches story in Botswana. Our relationship with SME’s is not just about financing, but rather support and business growth,” said Kurian.

He reiterated Banc ABC’s support for government’s initiative of involving a number of stakeholders in nurturing of businesses. He said there are multiple stakeholders who play various roles in supporting SMEs, like the Local Enterprises Authority (LEA) for technical advice, Citizen Entrepreneurial Development Agency (CEDA) for financing and Botswana Export Credit Insurance (BECI) for insurance.

“This demonstrates commitment to growth of the SME sector,” said Kurian.

He further explained that the SME packages that Banc ABC rolled out in the past two months cover both small and medium sized businesses. He expressed hope that the SME products will give birth to at least one company that, after five years, would have grown to become one of the country’s large scale companies.

“As Banc ABC we offer percentage interest in current accounts because we want to encourage saving and accumulation of business funds. Also, where entrepreneurs have excess funds, the bank will offer them higher percentage for a certain period of time,” said Kurian.


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