Tackling the issues of SMEs — A collaborative approach
AS SMEs (small and medium enterprise) have openly voiced their frustrations and displeasure of the treatment and support they have been receiving from key stakeholders especially within the banking sector last Wednesday at the PSOJs: 'Time for growth—unlocking the power of the SME' workshop, it seems as if their plights and concerns have not fallen on deaf ears.
In a sequel to the heated morning segment, SMEs and stakeholders alike reconverged after lunch in a guided breakout session under the theme: 'Setting the Stage—Building awareness of what exists, identifying the gaps and exploring possible solutions', to zoom in on a more personal way and deliberate on finding workable solutions for SMEs going forward.
In a press release to this paper on Friday, it was reported that going forward financial inclusion for SMEs would be the way as stakeholders vow to lessen the talk and bring more action.
The discussions had were guided by 10 Key Factors posited as catalysts for change in the financial ecosystem. The breakout sessions led to the creation of prospective initiatives to be enacted within the next 12 months. One factor that appeared to be of major concern was the number of products and services available to SMEs.
Speaking on behalf of her group of SMEs was Antoinette Davis, CEO of Ettenio—a SME, who put forward ideas to engender change.
“We as SMEs acknowledge that there is a problem with us providing collateral to receive loans. What we suggest is a system of asset-based lending. We encourage banks to move away from the traditional house or car and lend their eyes to receivables, our inventories and/or our intellectual property. We must conceive new ways of leveraging loans,” said Davis. She continued to provide checks and balances for the idea by highlighting the need to involve regulatory bodies such as the Bank of Jamaica and the Tax Administration of Jamaica; especially as the need for valuation of assets would arise.
Dmitri Dawkins, Entrepreneurship Programme manager at Branson Centre of Entrepreneurship in speaking about the credit adjudication process and risk assessment, recommend that banks have a more “tiered credit adjudication system based on clusters of businesses. This, he believes, will allow financial institutions to adjudicate credit based on industry and not just per individual, making the process faster and more cost-efficient.”
He further spoke to the SMEs' vision of increased transparency of the adjudication process. He urged the group to become more aware and knowledgeable about the requirements that needs to be satisfied in order to receive loans. “We want everyone to know exactly what they are being evaluated on—the standards they need to meet to receive loans so they can be better prepared in the application process,” he concluded.
The workshop saw proposals being made which seeks to deal with simpler application process with forms and requirements as well as lower SME loan delinquency rates, all of which are aimed at creating an overall regulated environment conducive to SMEs.
The Private Sector Organisation of Jamaica (PSOJ) in partnership with the Jamaica Bankers Association (JBA) hosted the first of what is to be a series of workshops targeted at improving the flow of capital from financial institutions to small and medium enterprises (SMEs). Four other workshops will be conducted over the coming 12 months to engage various stakeholders in the ecosystem in designing and implementing solutions to provide more funding and services to the SME sector. The Access to Finance facilitation panel consisting of the Jamaica Bankers Association (JBA), The Small Business Associations, Business Development Organisations and the government is mandated to monitor the progress of this initiative going forward.