Why SMEs struggle to survive ― Banking experts

Business experts and microfinance directors have identified lack of integrity and corporate governance as part of reasons why many small and medium businesses (SMEs) struggle to survive in the present economic situation.

Speaking at the seventh annual general meeting (AGM) of the KCMB microfinance bank limited in Ilorin on Wednesday, chairman board of directors of the bank, Olusoji Oyawoye, said that focus of business owners should be on clean business and integrity.

“When business is premised on profit at all costs rather than value adding modules, it backfires. Focus should be on clean business and integrity. You have to be clear on value you’re adding and be focused on customers that need your services.

“The year 2018 was particularly challenging for our bank. You will recall that a lot of businesses struggled to survive in that year. This led to a lot of our customers not being able to service their loans as at when due, leading to significant provisioning for bad or substandard loans,” he said.

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Oyawoye also said that despite the challenges, the bank had continued to fulfil her vision “as a reference point for operational excellence as well as enhancing entrepreneurial potential of small and medium business through best practices.”

He said the bank’s deposits portfolio grew from N209.7 million in 2018, representing a 6.9 per cent increase, adding that customer base grew from 18,163 in 2017 to 24,466 in 2018.

“The outlook for year 2019 is however on the upward swing as our determined efforts was geared at recovery of our non-performing loans and we have achieved great success in that regard this fiscal year.

“This development had led the shareholders to call for additional injection of N40m in order to meet the minimum statutory capitalization of N100m a tier one unit microfinance bank by the CBN come April 2020 (i.e. phase one of the N200m). As we speak, that amount is already oversubscribed,” he said.

Oyawoye, who said that the bank enjoyed the state government patronage in 2018 when it was chosen as one of the key partners of the state in the disbursement of the small and medium enterprise funds, added that the bank had remained a faithful partner in driving the state government initiatives.

“We appreciate the Kwara state government for her confidence in the bank and also restate that we are committed to partnering with the state government in its efforts at financial empowerment/inclusion of the citizens of the state,” he said.