Stanbic’s boost for liquidity-strapped businesses


Businesses that have been struggling to acquire working capital from a variety of sources now have more options as Stanbic Bank Botswana has introduced invoice discounting and purchase order finance.

These are working capital solutions where one borrows money from the bank against future payments due on specific invoices.

Head of trade and public sector at Stanbic, Desma Elvis-Ncaagae said invoice discounting and purchase order finance are designed to unlock liquidity tied in one’s business accounts receivables.

“Both payment platforms involve providing finance to Stanbic Bank’s existing and new customers who supply products and services to their target customers,” she said.

She added that the facility will increase the business cash flow and there is no tangible security required. In addition, she said the platforms create a streamlined credit approval process and quick turnaround time.

Elvis-Ncaagae further stated that Stanbic Bank strives to unlock economic potential of every entrepreneur despite their inability to provide tangible cover, as this has been a challenge for most small-to-medium businesses.

“We are here to play a financial and advisory role in growing businesses,” she said.

Elvis-Ncaagae said recent months have seen Stanbic Bank increase its momentum in working to offer an enhanced banking experience, with more convenient banking products and services.

“As a bank, we constantly strive to innovate in an ever-evolving business climate, and the trade finance area presented a clear need,” she said.

She noted that the challenges faced by entrepreneurs are in bridging the gap between supplying products and receiving payments from the debtors, adding that the introduction of these new payment platforms work to counter that.

While authorities have actively pursued reforms to facilitate private sector access to credit, many domestic entities, and especially micro, small and medium enterprises, still face significant difficulties accessing working capital, according to the Making Finance Work for Africa Partnership, an initiative to support the development of African financial sectors.

Stanbic’s facility also comes at a time when most businesses are struggling to access loans from commercial banks.

According to Bank of Botswana (BoB) figures released recently, the rate of loans uptake by both businesses and households dropped 45 percent in the first half of the year, from 13.5 percent in December 2014 to 7.4 percent in June 2015.

In the period, credit uptake by businesses took the hardest knock with year-on-year growth in lending to the business sector decreasing from 17.2 percent in December 2014 to 4.2 percent in June 2015.

Analysts assert that the slowing credit growth in an environment of lower interest rates is a reflection of the tight environment that businesses and households are operating under.

Research manager at FNB Botswana, Moatlhodi Sebabole said he believes the sharp decline in business sector credit growth is an indication of deteriorating business conditions due to subdued demand, while some businesses are unable to satisfy banks’ lending requirements.

“Businesses face challenges such as weak demand prospects, rising costs of inputs due to shortages of water and electricity and others, as well as inability to create sustainable employment – all of which make access to finance more difficult,” he said.

Editor's Comment
What about employees in private sector?

How can this be achieved when there already is little care about the working conditions of those within the private sector employ?For a long time, private sector employees have been neglected by their employers, not because they cannot do better to care for them, but because they take advantage of government's laxity when it comes to protecting and advocating for public sector employees, giving the cue to employers within the private sector...

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