Small and Medium Enterprises (SMEs) have been identified as a viable means of growing the nation’s economy. Ade Adebanjo promotes SMES with his outfit, UT Financial Services Limited. In this interview with ADETUTU AUDU, the finance guru opens up on the SME industry, stressing the challenges and opportunities that abound therein as well as how government, corporate organizations and individuals can benefit.
What are the challenges SMEs face in accessing loans?
You see, the problem majority of SMEs have in accessing loans is the interest rate. They are small businesses if you agree with me. They go to the bank and the banks are willing to give but at a very high interest rate, and this impacts greatly on the operators’ funds, and in most cases, the banks won’t give because most SME operators do not have collaterals or proper documentation. And the banks want everything on the table, and that’s where we come in – basically to bridge the gap – help. The banks will never help do documentation for anyone, so we are here to help. UT goes the extra mile to ensure operators surmount the challenge of rates because one thing that kills SMEs quicker than anything else is funding. They need funds to kick-start, and that’s where we pull our muscle. We help with the paperwork, help the business to stabilize and grow.
How do you assist SMEs?
We have done a lot. In the first place, we take a cursory look at the business, and then we advise on documentation. Some SME owners come with faulty accounting procedures; either with no business plan or the business plan is not updated. So we advise, as a first step because no one should go into business blindly. The first thing we do is to second the operator to a member of the team that assists, who will become his consultant and give him direction at no cost. He assists them in looking through their business plans and proffers something durable and workable. Again, we look at the business holistically and decide the amount of money required. Then we do all within our powers to advance this fund at the lowest rate without forgetting our limitations because we have cost of fund to consider. Thereafter, we monitor the business ongoing, using our team whose primary assignment is to monitor businesses in motion. They visit the customer and their businesses, analyze their activities and give suggestions/advice at regular intervals on the way forward.
Now on documentation, most small business owners are illiterate. How do you factor them in this documentation thing and others?
We have that, and have made provisions for them. But we also have the small manufacturing group; some people are making sachet and bottled water; another is starting a small furniture company; another is importing pencils and other goods abroad – all these are SMEs as well. For every category of SME, we have people in the market who will give them sound advice in the language they understand – be it Igbo, Yoruba, Hausa, Swahili, Tui, Ga, Ewe or whatever. There is always someone in our office to assist you.
Now, how does importation of foreign goods affect the growth of SMEs?
That is not just a big challenge, it is a big problem. You see when these goods come in from overseas, especially from places where their government has subsidized things and help get cheaper funds – talk about China, talk about Taiwan – their goods come cheaper and they hamper the growth of our SMEs because the government of those places has helped them to produce goods at a cheaper rate, and sent it down, and the Nigerian populace as well prefers imported goods. There’s a perception that those are better though it is not always true, but the perception is there, and people go for it. This is really damaging the growth of our SME industry. It has to stop.
Most SME operators complain of major challenges like excessive taxes from government of all tiers, and these have sometimes brought their businesses down. What’s your take?
That is true no doubt, and I can attest to the reason the prices of some products are high. The levies and taxes from government are high, and VAT also. We want the government to step up their game a bit in the area of taxes. In UK and some other places, you don’t pay taxes or VAT at certain supermarkets and on some items; this really helps. The government should look closely at the SMEs, especially the start-ups; give them a break of one or two years so that they can grow. You may suffer it as a government, but you will enjoy it later. This is because when they grow, they will pay taxes. So SMEs deserve tax holidays. Like a new born, you make sacrifices for them; they need time to grow. All the tiers of government from federal to local governments, must begin to review their tax policies, especially those of market places. Those are the ways foreign countries have been able to do it and bring in their goods cheaper. It would therefore, be easy for us to produce goods here and sell in Britain and other places because the taxes are reduced, and so doing, foreign currencies will come in.