financeSMEs

Promoting financial inclusion through SME support

3 Mins read

To harness the potential of its young population and its natural resources, Africa needs to overcome various constraints to growth and development. Many countries on the continent still battle with financial exclusion, inhibiting large portions of the population from actively taking full part in the economy.

Young black female designer working in a woodworking workshop.
Absa RIS-Finacial inclusion Image 2

Absa Group, one of Africa’s largest diversified financial services groups with a presence in 14 countries, notes that financial institutions have a unique role to play in enabling inclusive growth. One of the ways that Absa aims to do this is through promoting self-sufficient communities by supporting the growth of emerging entrepreneurs.

“As a leading African financial institution, Absa is mindful that we play an important role, both as a financier and stakeholder, in enabling sustainable economic development,” says Vusi Fele, Chief Procurement Officer at Absa Group. “As part of our effort to improve financial inclusion, we have developed a user-friendly online portal focused on providing additional opportunities for Africa’s Small, Medium and Micro-Enterprises (SMMEs), which we view as key drivers of post-pandemic growth.”

The platform allows SMMEs to access corporate supply chains, and at the same time enables Absa to further contribute to ongoing entrepreneurship development. Fele explains that the goal is to promote two-way engagement and bridge the communications gap between the bank and SMMEs in terms of products, services, tenders and requests for proposals (RFPs), ensuring that all relevant businesses are included.

“Absa’s Procurement Market portal not only demonstrates our strategy of promoting responsible and inclusive procurement practices, but also ensures that all suppliers are aware of our service requirements; information that was not previously widely available,” he says. “What’s more, it will help us build mutually beneficial, thriving, inclusive and healthy supplier relationships.”

Fele firmly believes that a supplier diversity approach will assist in progressively transforming the bank’s supply chain. “Not only will we be able to identify suppliers that comply with regulatory requirements, but we’re also excited to welcome new suppliers to our business.”

Suppliers can now easily add their details to Absa’s database, and identify the procurement categories and services the bank is looking for, from construction and marketing, to IT and cash management.

Beyond this, Fele says, at Absa, we use our scale, reach, and significant balance sheet to maximum benefit to provide a multi-pronged way through which SMMEs can grow and achieve their possibilities, to this end qualifying SMMEs participating in the bank’s inbound supply chain may be eligible for Absa’ Supplier Development Programme.

This programme provides business support, training, mentoring, advisory and more. “These businesses are also able to obtain development funding in line with the Banks lending provisions and with no or minimal collateral required, other than the committed spend contract to supply goods and services,” he says.

Fele encourages small businesses across the continent to visit the platform and sign-up.

Money makeovers

Absa believes that improving financial inclusion begins at grassroots level. It focuses on enabling stronger individual financial behaviours through literacy, inclusive access and expanded financial education, by helping people make responsible and well-informed choices that pave the way to financial freedom, and a healthy financial future for themselves and society.

Since 2018, Absa and the City Press newspaper in South Africa have partnered with award-winning financial journalist, Maya Fisher-French, to challenge six Absa customers per year to change their financial behaviour to start making more sound credit decisions, manage their personal finances better and grow their financial assets.

In the 2021 edition of the City Press/Absa Money Makeover Challenge, the six participants who underwent the six-month financial boot camp were all selected because they had a side business they wanted to develop to generate additional income.

Each candidate was allocated an Absa financial adviser to assist them with organising their finances and reaching their personal financial goals, as well as each an Absa business mentor to create a business plan.

City Press/Absa Money Makeover Challenge Winner, Nocawe

They had to complete various financial tasks – within allocated budgets – to compete for the final prize of R20 000 (roughly £1,025) in cash.

The 2021 winner was Nocawe. She is in her late thirties and married with two young children. Although she and her husband both earned good salaries, they were facing financial pressure due to a large personal loan and car finance on three cars. Her dream was to own a successful agribusiness.

“I love farming and have always had green fingers. Through my mother, I have access to tribal land,’ she says.

Over the course of six months, with the help of Absa financial advisor Simanga Nkala, she paid off R64,000 (approximately £3,280), saved R20 000 (£1,025) for emergencies, and made monthly investments of R3 200 (£165).

She has also achieved her dream of starting a poultry farm. Working with Absa business mentor, Albert Nkosi, she completed a thorough business plan and underwent training to farm broiler chickens. In November 2021, she launched her start-up.

While only one contestant took home the cash prize, every contestant ended up with something even more valuable; control of their finances and the ability to plan and save for their life goals and their families.

Source: bbc.com

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