Oliver Kazunga, Acting Business Editor
STANBIC Bank has called on Small to Medium Enterprises (SMEs) to relook their business model to promote their survival and growth.
In a statement, the bank’s head of enterprise banking Ms Auxilia Kambasha said the country’s economy was propped up by businesses that are classified into many groups depending on factors such as annual turnover, number of employees and value of assets, among others.
She said such segmentation could be translated to mean that operational models of those particular different businesses were expected to be different and aligned to the various factors that determine whether or not the enterprise stays afloat.
“Enterprise businesses, normally referred to as small to medium businesses, should embrace different operational models that are more sensitive to the nature of the business and capital available to them if they are going to thrive,” said Ms Kambasha.
She said according to the World Bank, 90 percent of worldwide businesses were “SMEs” and they create 50 percent of the jobs while contributing a third of the Gross Domestic Product.
“These statistics explain why different economies have put in place measures that create a favourable environment for these businesses to flourish.
“Institutions such as banks and revenue authorities in many countries have taken these factors into consideration; however, there is still need for institutions to do more on capacity building to assist enterprise business owners.
“Issues such as lack of information have caused a lot of enterprise businesses to struggle to break even, and some to the extent of closing shop,” said Ms Kambasha.
She said the potential for such enterprises to grow was great and that was the reason her bank has stopped referring to them to as “SMEs”.
“The size of a business is rendered obsolete once their operational model shifts from the two extremes which are the norm in such organisations.”
Ms Kambasha noted that most of the enterprise organisations require access to markets and connections more than they need funding for them to grow.
She advised: “Enterprise organisations need to embrace all the low cost financing available to them in order to meet their capital and day-to-day operating requirements.
“Enterprise banking clients are characterised by huge volumes of banking transactions and ‘cash heavy’.
“However, transactions become expensive if they are carried out through the branch which is why digital banking should be their go-to solution.”
Ms Kambasha said her financial institution has introduced a banking model that was cost sensitive to their enterprise banking customers, an out of branch approach to banking that was being facilitated through an enterprise direct customer contact centre and the enterprise online banking platform.