United Nations Development Programme (UNDP) has signed a Memorandum of Understanding (MoU) with six local banks to prioritize access to funding for small and medium enterprises (SME).
The financial institutions have also extended additional offerings of savings accounts, SME employee accounts, financial literacy training and workshops, as well as bank-led mentorship and business development programmes to the participants, providing a holistic package for the SMEs.
The UNDP-SDP works to create demand-based, market-driven opportunities for SMEs to increase their competitiveness through the innovative Suppliers Development Methodology (SDM) while connecting essential small-scale producers and suppliers to larger markets locally as well as abroad.
The programme is in its second year of implementation and ‘access to finance’ is one of the key business challenges listed by SMEs on the programme thus far. Lack of collateral or security, poor business plans, low financial literacy and the lack of financial records are some of the key factors that hinder a SMEs ability to raise capital.
UNDP Resident Representative Jacinta Barrins said they recognize the difficulties faced by small businesses in their attempts to apply for loans, lines of credit and expansion capital through traditional banking.
"As such, the UNDP-SDP approached the commercial banks and national financial institutions to provide access to holistic finance packages, tailored towards the needs of SMEs that will provide investment and credit facilities at discounted rates," she said.
She noted that the just-signed MoU will work to provide SMEs with access to markets, knowledge and finance.
On her part, UNDP-SDP project manager Boitumelo Mbaakanyi applauded the banks for supporting the UNDP’s efforts to grow the SME economy in Botswana. She highlighted that the banks were bringing much to the table in the form of preferential lending rates; innovative funding mechanisms; projections-based cashflow funding vs. historical financials; SME-friendly credit facilities; and credit guarantees.
The UNDP-SDP provides training and support that cultivates growth within SMEs to a level where they can be considered bankable, meeting the requirements of commercial banks and national financial institutions. The partnership with financial institutions will go further to guarantee that the suppliers will always have an audience with the banks and financial institutions, as the limiting barriers to entry are lifted.