Financial institutions need to investigate alternative methods to reinstate liquidity for Small and Medium Enterprises following the implementation of DDEP, according to Dr. Arthur-Annobil.
Casual Take on Banking for SMEs: Dr. Kweku Arthur-Annobil's Suggestions
Facing a funding crisis for businesses, Dr. Kweku Arthur-Annobil, Strategy Lead & Business Manager at Stanbic Bank Ghana, suggests unique ways to support SMEs. He proposed these ideas during a stakeholder conference titled 'Rebooting Bank's Liquidity for SME Growth: The Power of Impact Investing'.
Speaking about reviving banks' liquidity to fuel SME growth, Dr. Arthur-Annobil mentioned two key strategies. "First, banks should ally with impact investment funds," he said. "By doing so, they can enhance their resources and share risk with these funds. Some banks are already witnessing noticeable results from this approach. The second suggestion is ecosystem banking. This involves banking not only large businesses and multinationals but also the SMEs connected to them across the entire value chain."
Discussing the hurdles SMEs face in securing funding in the Ghanaian market, Dr. Arthur-Annobil didn't shy away from pointing fingers. "I'm not blaming SMEs entirely, but challenges like poor bookkeeping, management issues, especially sole proprietorship, make it tough for companies to establish their independence from their operations," he mentioned.
Beyond banking-as-usual, Dr. Arthur-Annobil emphasized the need for a well-oiled entrepreneurial finance ecosystem. This ecosystem is crucial for overcoming the massive funding gap faced by SMEs and early-stage companies. He called on the central bank and the SEC to develop frameworks for regulatory techs. These techs will enable SMEs to function and secure funding through alternatives like angel investing, crowdfunding, and corporate venture capital firms.
The conference was a gathering of financial experts and academia members to discuss challenges in funding and liquidity for both banks and SMEs post-DDEP. The event also provided valuable insights into the struggles faced by commercial banks and central banks' endeavors to assist commercial banks. The panelists for the discussion included Mrs. Doris Ahiati, Financial Consultant; Mr. Clifford Duke Mettle, Chairman, Banking Commission-Ghana; and Dr. Francis Atsu, Head of GIMPA Enterprise Risk Management.
Going Beyond the Common:To truly tackle the funding problem, a functional ecosystem for entrepreneurial finance is indispensable. Here's how such a system can work:
- Varied Financing Options: With diverse funding sources, SMEs will have easier access to capital, lessening reliance on traditional banking channels.
- Financial Inclusion Boost: Efforts to strengthen financial services for SMEs ensure more entrepreneurs, particularly undeserved groups, can avail services catering to their unique needs.
- Sustainable Growth Support: A healthy ecosystem provides nurturing environments with training and digital resources, empowering SMEs to grow sustainably and contribute positively to economic recovery.
- Innovation Encouragement: A thriving ecosystem fosters innovation by offering a plethora of resources and funding opportunities, inspiring entrepreneurs to develop creative products and services.
In essence, a functioning entrepreneurial finance ecosystem supports SMEs by offering a multitude of financing options, promoting inclusivity, and encouraging sustainable growth, easing the funding challenges faced by SMEs and start-ups.
- To fuel the growth of SMEs, Dr. Kweku Arthur-Annobil suggests cooperating with impact investment funds, which can extend banks' resources and share risks, as discussed during the conference titled 'Rebooting Bank's Liquidity for SME Growth: The Power of Impact Investing'.
- In addition to conventional banking, Dr. Arthur-Annobil emphasizes the importance of ecosystem banking, where banks support not only large businesses but also SMEs across the entire value chain, as mentioned in the same conference.
- Highlighting the difficulties SMEs face in the Ghanaian market, Dr. Arthur-Annobil recommends the development of regulations for regulatory technologies, such as angel investing, crowdfunding, and corporate venture capital firms, to bridge the funding gap.
- Beyond providing valuable insights into funding challenges for banks and SMEs post-DDEP, the conference also discussed the need for a well-oiled entrepreneurial finance ecosystem, which includes offering various financing options, promoting financial inclusion, encouraging sustainable growth, and fostering innovation.
- The entrepreneurial finance ecosystem, a crucial element for SME growth, can help secure funding for undeserved groups, provide training and digital resources for sustainable growth, and inspire innovation by offering numerous resources and funding opportunities.
