Launched in November 2017, the Barclays Bank Enterprise and Supply and Development (ESD) Centre has assisted local Small and Medium Enterprises (SMEs) to the tune of over P80 million.
In this interview with Voice Money’s KABELO ADAMSON, the bank’s Head of ESD, Kushatha Chilisa, explains Barclay’s are driven to supporting SMEs as they view them as the economy’s heartbeat.
Q. Take us through the ESD Centre.
A. We started in 2017 in November when we officially launched the centre.
The thing is, at Barclays unlike other banks, we started looking at ways we can support SMEs, which as you know are the heartbeat of the economy.
What we noticed is that SMEs typically have struggles that banks were sensitive to.
It is common knowledge that if you are a start-up and have no security, you will struggle to get financing from a bank.
Q. How do you assist them then?
A. What we did as the bank is that we looked at the different pillars and we wanted to address the issues that SMEs have.
These include access to financing, capacity building, which basically is training, as well as access to markets.
You will find that local SMEs have great products but the challenge is they don’t have the corporate to sell to.
In response to these issues we decided to form this centre, the ESD, which has different products for different corporates.
In terms of financing, we have committed to help the start-ups with funding without security, provided they have a contract.
Q. How’s the uptake been so far?
A. In our first year of operation we availed funding for the SMEs of over P80 million in less than 12 months because we started having clients around mid last year.
This year we are looking at doing P100 million, but it looks like we will do more than that as we are already over P60 million.
So, you can see that we have the appetite to help SMEs!
Q. It certainly seems so! What is the programme’s annual budget?
A. If we have the SMEs coming through, we are looking at over P200 million because the appetite is there.
However, there is no cap and for the first year we didn’t think we would reach that amount – our target then was P30 million but we availed three times more.
It depends on how many SMEs are coming and how many corporates want to have the programme.
Q. What factors do you consider when deciding on applications?
A. The key thing is if there is a corporate who wants to transform their eco-system or their value chain and want to buy from local producers, that is where we get involved.
For example, government has put a ban on the importation of water.
So as a bank we then say, okay, there is retailer who wants to be an off-taker of a locally produced water.
So the off-taker is provided with a contract, we move in to buy the machines for them, basing our comfort on the contract.
Q. Do you target all sectors or are you selective?
A. No, we target every sector. The greatest traction we have made has been in mining but it’s not limited to that.
We have done a bit in retail and right now we are still trying to push the corporates to think of ways in which they can assist SMEs.
However, a lot of that is based on the SMEs themselves.
A lot of our local SMEs only want to supply for two months and after getting money they just disappear to go and spend that money.
Coprorates don’t want to deal with people who are in then out, they want someone who will supply them consistently and grow with them.
Q. What would you say are the challenges facing local SMEs?
A. I would say human resource management.
A lot of them don’t realise there is that importance of workmanship compensation, how to do employment contracts.
Most of them do hiring verbally. Some of these things take education to know why you need to engage people formally.
Even branding, most of the time SMEs have good products, but the problem is branding.
Those are some of the challenges that we have seen.
Financial management only becomes trickier as the business grows.
Q. How many SMEs have you assisted so far?
A. By last year we had assisted about seven.
But I would say it’s not about the numbers – of the people who have come to us, none has been rejected, because like I explained, it’s about the relationship between the corporate and the SME.
And of those seven that we have helped, over 150 jobs were created.