As a follow up to its highly successful MSME Clinic, Heritage Bank has announced the launch of a new SME Finance Package called the Paris Klub SME (PKS) Scheme. The new scheme is designed, according to the Bank, to support lending without core collaterals.
While speaking on the rising tide of the challenging economy and the plight of an estimated 17 million Nigerian SMEs out of which only about 10% have access to finance, Managing Director of Heritage Bank, Mr. Ifie Sekibo said there is no better time to support the SMEs than now when the survival of the economy depends largely on retail businesses. He noted that to improve the dwindling fortune of the economy, a robust SME business environment has to be developed.
“This is why we introduced the Paris Klub SME (PKS) Scheme to support lending without core collateral. We take pride in our hybrid solutions where borrowing customers gain access to more value added services including consulting, business tools and technology. What we have done is to bring up an innovative idea of how to finance SMEs without collateral. Once we identify the SMEs, we offer advisory services to them, we help them to structure their businesses and also with their cash flows”, he explained.
Sekibo noted further that Heritage Bank is currently developing a sponsored interest scheme for the educational sector where educational institutions can borrow at low rate subsidized by the scheme manager. “We are also discussing partnership programs with Venture Capital Firms to introduce debt-equity financing option”, he revealed.
Speaking further, he noted that one major reason why banks were not funding SMEs was because of the risk involved. “A high perceived risk of lending to the largely unstructured SME Sector is a major issue. More efforts and resources are generally required to effectively monitor loans to SMEs which may result in eating into the bottom-line. In addition, Banks also have different risk appetite.”
The Heritage Bank helmsman admonished banks to move beyond challenges of risk, by de-risking SME businesses and making them more bankable. He said Heritage Bank is supporting more retail businesses today by looking beyond risk.
“Our strategy at Heritage Bank is to de-risk the SMEs and make them more bankable The process of de-risking SMEs is what makes one bank different from the other”, Sekibo affirmed
Speaking on the new SME Financing Scheme, Group Head, SME, Heritage Banking Company Limited, Mr. Bayo Ogunnusi noted that Heritage Bank is working on several other sector-specific finance schemes in its quest to make SME financing simple. He specifically mentioned the agric sector where a large chunk of the nation’s SMEs operates.
“We have financed a few agric projects and understand the challenges of the sub-sector. However, as a bank committed to improving national growth and development, we are encouraged by the long term potentials of the sub-sector. We are also leveraging on CBN Agricultural Funds (MSMEDF and CACS) and currently developing capacities to effectively support the agric sub-sector.”
Ogunnusi affirmed that with the ongoing integration of the recently acquired Enterprise Bank with about 160 branches and 400 points of presence, which include ATMs and mini kiosks across Nigeria into the Heritage Bank network, the Bank’s capacity to grow the retail business sector would be properly enhanced.