A major disruption in the familiar pattern of costly credit access by Micro, Small, and Medium Enterprises (MSMEs) has come with a bang. Thanks to Access Bank Nigeria Plc which is now offering unusual, collateral-free financing support targeting 30, 000 MSMEs this year alone.
With a historic credit innovation that is already changing MSMEs’ lending story, the Nigeria’s largest retail bank says all that MSME customer needs to access credit is just to keep a good credit record, be able to keep sales record and be assisted with managerial support services from the bank.
“We don’t make impossible demands on the customer. We won’t ask you for a leg and an arm. Once you keep good credit record and sales record, that is your guaranty to get a loan,” says Access Bank’s Head of Emerging Businesses, Mrs Ayodele Olojede.
In a chat with financial journalists in Lagos, Olojede disclosed that as at end of June, more than 12, 000 MSMEs have come under the radar of the scheme intended to drive speedy growth of the sector remarkable for credit starvation by commercial banks.
According to her, in 2018 alone the bank advanced N37billion new loans to MSME new customers, making the bank highest lender to operators in that key segment of the economy.
“We don’t pay lip service to our love for MSMEs. To the extent of how much we want to support them, we have also invested significantly in our understanding of the risk factors, risk variables in that segment,” said Mrs Olojede.
She said the bank has introduced innovative approach to lending to the sector where customers are supported with all important managerial finesse, particularly sales records. But they (customers) also need to keep good credit record which smoothen their chances of getting loans.
“What we do is work with the type of assets that you have. We leverage the National Collateral Registry (NCR) to be able to register those assets. I make bold to say that it is only Access Bank that is using that NCR in support of MSMEs.
“With this innovative approach that we introduced, even customers who do not have business records are able to access loans because we work with our partner lawyers to be able to help them register that business. Once that is done, they are able to get loans from our bank,” Olojede concluded.
Boosting credit access to women with W-Power initiative
Women in business have got greater chances to get the loans, not only faster but also at concessional interest rate of 15 per cent per annum, a rate much lower than regular market price. However, this applies to businesses where 50 per cent ownership belongs to the female customer applying for the loan. Olojede disclosed that 30 per cent of the N37 billion loans in 2018 was used to support women through the flagship W-Power initiative.
She said “What we have done with W-Power initiative is that if you (as a woman) own 50 per cent of your business, you get a loan at 15 per cent per annum.”
To encourage other women-owned businesses that are not yet at the stage of 50 per cent shareholding, the bank has also provided two basis points concession for 40 – 49 per cent woman shareholding, and one basis point concession for 30 – 39 per cent woman ownership.
What this means is that women owned businesses are granted loans at interest rates lower than regular market price which the bank charges.
Three major sectors targeted but not limited to those sectors alone include health education and technology. For the health sector, the lender has entered a partnership with medical credit fund which has enabled them grant collateral-free loan of up to N3 million to individual loan applicants.
For education, up to N10 million collateral free loan could be granted specifically for working capital purposes, to buy school uniforms, laboratory equipment, books, and for expansion.
“We are also expanding our footprint in the technology sector as well. Very recently, we introduced creative sector loan and we are currently at the forefront of pushing it. We are about the only bank that has submitted applications to the central bank on that,” said Olojede.
Access Bank’s MSMEs Clinic Support Services
From Access Bank perspective advancing credit to the sector operators is not enough. MSMEs clinic workshop where operators are groomed with managerial skills is one of the critical areas where operators require intervention and support for the survival of the businesses.
For this reason, various workshops are being organised where operators are being groomed on various aspects including how to leverage social media to increase sales and visibility beyond their immediate location.
The belief is that if MSMEs are able to sell the different products that they produce, they can pay back the loans without tears. “What we do is to give them an expository on digital platforms different from traditional methods of selling. We expose them to all these platforms to help them sell beyond the proximity of their locations,” said the Head of Non-Financial Services, Emerging Businesses, Mrs Chioma Ogwo.
Mrs Ogwo explained that something else the bank does to help MSMEs is to get their consultants engage operators one on one with a view to addressing areas where they have challenges.
“Typically, our consultants will ask MSME operators questions around the areas where they are struggling and then they will be able to proffer solutions. We have been doing this for many years. But last year, we were able to engage 11, 000 MSMEs customers.
“So far, half year already, we have done about 12, 000. Our target this year is to be able to engage 30, 000 MSME customers helping them with their finances, helping them with their business management practices, helping them with alternative methods of how to market their businesses and then also support them with loans,” Ogwo stated.
She explained that it is not as if banks do not want to support MSMEs with loans but there are risk factors that need to be addressed including managerial competence to sustainably run a business successfully.
This, and other factors such as keeping sales records, credit records, and ability to deploy technology platforms for sales are relevant factors which Access Bank has addressed to enable MSMEs access credit, sustainably manage their businesses successfully.