National Bank of Malawi (NBM) plc recently partnered with Growth Africa and Mhub to develop and distribute targeted video content to start-up businesses under the Growth Accelerator programme 2020 Cohort.
Our Business Editor William Kumwembe sat down with NBM plc Head of Retail Banking Division (PBBD) Oswin Kasunda to find out more about the programme and understand what other services NBM Plc makes available to start-ups and SMEs. Excerpts:
NBM plc is one of the partners in the Growth Accelerator Programme – what does this program entail and what prompted the Bank to partner up on this project?
The programme seeks to accelerate the growth of innovative and impactful early stage Malawian enterprises. The objective is to grow entrepreneurial ventures which can create jobs and promote private sector development. This is done through provision of access to risk capital and business acceleration through mentorship and technical assistance. Growth Accelerator was launched in June 2018 with United Nations Development Programme (UNDP) and the Royal Norwegian Embassy as main funders. Growth Africa and Mhub are the implementing agents of the programme. The accelerator provides 12 months of business support and acceleration.
National Bank of Malawi plc is equally interested and working towards the development of start-ups and SMEs; therefore, the Bank joined the programme as a partner in June 2019.
As a Partner, what exact role does NBM plc play?
The Bank’s Main role is to offer debt finance to entities on the programme that require 30% contribution to match the USD40,000.00 grant by UNDP. To access the grant, an enterprise is required to present the 30% own contribution. In addition to this, the Bank provides mentorship on relevant business and finance topics in contribution towards the skills training aspect of the program.
What value will start-ups involved extract from this programme?
We believe that members of the annual cohorts will develop to their utmost capacity through the business acceleration that they are privy to. This will lead to a growth in profitability of businesses involved and a growth in the economy through the payment of taxes and creation of jobs among others. As a Bank that values SMEs and start-ups, we are keen to aid in further growth of these enterprises. We are therefore optimistic that this program will have a positive domino effect.
Outside of the Growth Accelerator Programme, NBM plc serves SMEs and start-ups nationwide. What is the Bank’s commitment towards development of these operators?
The Bank views SMEs as an engine for the country’s economic growth and is therefore committed to supporting them. To start with, we have in place an SME Programme/policy that acts as a guide on service provision for this customer segment. Through the PBBD, the Bank has Business Centres that offer services to SMEs. These include the provision of financial advice, access to appropriate products and services as well as suitable credit facilities that are meant to enable SMEs grow. Our approach to SMEs is not uniform, - we have segmented them depending on the industry/sector they operate in as we realise that requirements and experiences will vary based on the industry.
Additionally, the Bank regularly hosts SMEs to business management training sessions which also presents us with much needed feedback from the customers. Critically, in 2019, the bank established a subsidiary known as NBM Development Bank which caters to SMEs with novel business ideas in need of long-term financing.
You mention a set of products/services/facilities specifically developed to serve SMEs and help them grow – could you elaborate on these?
We have several long-term and short-term facilities available. For example, the Bank provides short term loans to assist on working capital finance. Repayment period for these is up to 24 months. There are also medium-term loans that are available to assist growing businesses. These are repayable up to 60 months. We then offer long term loans usually for capital expenditure. These are repayable for up to 120 months.
Recently we introduced Amayi Angathe, a product aimed at helping women entrepreneurs to access banking facilities which includes a collateral free credit facility repayable in 24 months.
SMEs can access Invoice Proceeds Based Finance which is also collateral free as a short-term finance against an invoice raised to a financially sound organization. SMEs can also access all types of guarantees to enable them execute contractual requirements normally demanded by employers in business. These include Bid Bonds, Performance Bonds and Advance guarantees among others.
What are the minimum requirements that SMEs need to access these products/services?
At a basic level, the customer needs to be a registered business and have a business bank account which has been operational for six months. It is important to also have business premises that we can visit to gain an understanding of business operations. Let me point out that due assessment is made on each request where capacity to repay is established. Proper advice is then provided to those that may not immediately qualify for a loan.
As a seasoned banker, what is the economic outlook for small to medium business operators, taking into consideration effects of the Covid-19 pandemic?
Covid 19 pandemic has not only affected SMEs in Malawi but the whole world. This was unforeseen and has not been experienced before in our living time. However, the economic outlook looks to rebound in 2021 as per the projections at hand. The situation on Covid 19 may ease up as it has been doing lately in Europe.
How best then, should they keep their businesses productive both during and after Covid-19?
The industry sectors have been affected differently, hence there is a need to understand the impact to each sector. Businesses more than ever need to manage their cash inflows and outflows during and after this pandemic. Effective working capital management is crucial in this period. This is by keeping the right amount of stocks, right number of days in debtors. This is not the time to unnecessarily over commit the business. One would rather do business based on the assured known market. It is highly important to assess the associated risks before engaging in some business activities.