NCBA Bank’s MSME Financing offers tailored support, flexible loans, and financial literacy to help Kenyan entrepreneurs grow resilient businesses.
Last month, I was glad to join an X Space where Citizen Digital hosted NCBA Bank for an insightful conversation on building resilient MSMEs. The speaker was Susan Ndung’u, Head of SME Banking NCBA and she discussed the key challenges that these businesses face, and how NCBA Bank is addressing them.
Micro, Small, and Medium Enterprises (MSMEs) form a key part of any economy, given their sheer numbers and the money they move around. In Kenya, for instance, it is estimated that we have around 7.4 million MSMEs that are further estimated to be at 40% of our GDP.
Yet, these businesses operate in a complex environment with so many risks as they scale and build resilience. They therefore need a lot of cushioning to move forward and be able to withstand shocks, equipment failure, and extreme weather, to name a few. They need to recover from pitfalls quickly and continue growing, and this is where good financial partners come in.
One of the most persistent challenges MSMEs face is access to finance. Whether starting out or expanding, business owners often cite a lack of capital as a major barrier, and it is great to see banks like NCBA offering products and initiatives tailored towards this specific problem. Not only with financing since money is not everything, but also sensitization for business management and financial skills so that entrepreneurs can avoid traps like weak budgeting and poor decision making which could eventually lead to business failure.
Another challenge is limited access to markets. When building a business, it makes sense that an entrepreneur will focus on daily operations, leaving little to no time for networking and exploring new markets. MSMEs also face regulations that can create roadblocks to growth, where unclear rules disrupt operations with no clear path out.
Entrepreneurs also face the challenge of acquiring skilled labour which tends to be quite expensive, leaving many businesspeople to employ unqualified relatives or acquaintances in key positions. This undermines performance and growth since positions like accountants and IT managers need trained and competent talent.
Cash flow management is another issue that can cripple a business. MSMEs often struggle with delayed payments and lack of solid systems to track and manage their money. Without proper financial literacy, an example being what NCBA run all of April, it’s easy to divert business funds for personal needs, further weakening the enterprise.
During its financial literacy campaigns, NCBA Bank addressed these issues head-on and I am especially a fan of the TV programs they were running with Family TV, which I wrote about here and here. (Insert 2 links)
NCBA has positioned itself as a reliable banking partner for MSMEs not only with tailored financing products and dedicated teams, but also with tools for banking, cash flow management, income and expense tracking, and financial literacy. Above all, the bank stands out for speedy processing of financing for businesses.
During the X Space which I was glad to tune into, one success story that Susan Ndug’u used to highlight the value of a good banking partner is Epicenter Africa, a business whose purpose is to provide sustainable power and water solutions in Africa.
The entrepreneur received a contract to drill water in a semi-arid area in Kenya, but the project required expensive equipment and upfront capital with payment slotted for after delivery. NCBA Bank came through with a structured facility that allowed Epicenter to purchase equipment and repay the loan after receiving their payment. This not only supported project execution but also helped the business grow sustainably, especially because the equipment they purchased continued to serve other projects after that. (Link Epicenter Africa)
Part of NCBA Bank’s strategy for tailoring of financing facilities for entrepreneurs is to go easy on collateral, which is one of the things that makes borrowing intimidating and even impossible. Some of the bank’s solutions are to have partnerships with organizations like Africa Guarantee Fund (AGF) which shoulders 50% of the risk, reducing the burden on both the bank and business owners.
The bank also offers unsecured lending of up to Ksh 6 million, based on account history and business performance. This is a huge relief for businesses lacking traditional collateral.
In addition to financing, NCBA provides non-financial support with a network of business advisors who work both in branches and on the ground. This is informed by the fact that financial literacy is non-negotiable. NCBA has also partnered with Strathmore University to deliver a structured 16-week Enterprise Development Program for businessmen and women to have some formal education on finances. NCBA has gone further and subsidized the fees for learners and is in discussions with other universities to spread the course to other areas, including rural areas.
Still towards financial literacy, NCBA also organizes webinars, bootcamps, and talks featuring experts like tax consultants. A great example is the X space that has informed this article. All these forums help MSMEs stay informed, connected, and prepared.
Women-led businesses are not left behind. AGF’s Affirmative Finance Action for Women in Africa (AFAWA) program provides tailored support and greater access to unsecured financing for women entrepreneurs. There’s also Proparco financing for businesses focused on sustainability and green solutions.
For MSMEs ready to grow sustainably, a reliable financial partner can make all the difference and NCBA is one of the best partners out there.
Follow us on Twitter and Facebook for real-time updates.
