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Financial services 14 June 2022

Southern Africa’s small businesses lead next phase of African growth

Standard Bank drives regional enterprise development

Standard Bank’s newly minted Business & Commercial Clients (BCC) division is dedicated to leveraging the power of small, medium and large enterprises to expand inclusive domestic business growth across Africa.

Gaborone-based BCC Southern Africa Head, Leina Gabaraane believes Africa is entering an exciting expansion phase, characterised by rapid private business formation and growth.

As such, Standard Bank’s BCC division is deliberately focused on partnering with businesses to build a capability ecosystem that will support small traders, agribusinesses and entrepreneurs to grow.

Africa’s existing large cross-border businesses, established corporates and global multinationals operating across the region, are already well catered for by the continents’ domestic and global banking community. They are also a very limited market. The much more numerous, smaller, businesses at the base of the African business pyramid – the street-side traders, small importing and distribution enterprises, family agri-businesses and start-up local service enterprises - are currently not well understood. Despite their greater potential for growth, they are also poorly served by the continents’ financial services sector.

By partnering with the micro, small and medium enterprises that define the majority of businesses within the Southern African region, Standard Bank provides the debt, advisory services and in some instances even the equity participation to grow small businesses.

Banks require a lot of financial and governance information to form a risk view on extending credit, or not. Most micro and small businesses simply don’t have this information – certainly not in traditionally documented formats.

Standard Bank’s long presence and deep experience working with emerging businesses across Africa has allowed the Group to adjust its risk philosophy and practice to work successfully with businesses that don’t have collateral - or track, collect or share numbers in traditional ways. Instead, using technology to record payments, transfers and other transactions – even if conducted on mobile phones or hand-held devices – Standard Bank is able to develop a comprehensive risk view of small businesses sufficient to extend credit.

Successfully lending to and supporting this segment requires that banks have a much more intimate understanding of clients. This is another uniquely Standard Bank advantage.

Standard Bank’s on-the-ground presence and long-established practice of extending business support as well as mentorship to its client businesses in Southern Africa provides detailed knowledge of its smaller business clients. It is this intimate understanding of client businesses in the region that adds further confidence, building trust and also contributing a view on which to extend credit.

Gabaraane reports phenomenal uptake of digital loan facilities amongst smaller businesses across the region. Through simple digital scoring, lending now reaches a very large informal business market in Southern Africa – all with minimal need to come into a bank.

With dedicated businesses in Botswana, eSwatini, Lesotho, Mozambique and Zimbabwe, Standard Bank’s Southern Africa BCC division will focus the Group’s considerable enterprise support experience and systems on nurturing and growing African businesses domestically, regionally, and globally.

Helping small business clients correctly track and gather financial information, secure loans, meet bank-approved dealers, off-takers or suppliers in South Africa or China, negotiate forex quotas or letters of credit, complete cross-border paperwork, or finance vehicles, can catapult a survivalist operation onto a multifactor growth track.

While the five economies that Gabaraane’ s BCC division covers in Southern Africa have extensive small enterprise segments closely integrated with South Africa, each is also unique. Some are subject to acute foreign currency shortages. These require expertise in foreign exchange quota negotiation and supply. Controlling and cushioning pricing volatility remains a challenge in most regional economies. Others struggle with accessing cross-border opportunities. Businesses in the smaller economies face strong market dominance. Logistics is a perennial challenge. Most need help integrating downstream suppliers or off-takers. Some are routinely challenged with political instability. All struggle to access capital.

By partnering with these businesses, Standard Bank deploys its developed local, global and digital ecosystems to assist small businesses access the capital, skills, local and global networks, thought leadership, mentoring, guidance and digital tools that open doors and drive growth.

The aim in ten years’ time is for Standard Bank to point to a stable of new transregional businesses operating across and out of Southern Africa that have been berthed as small local businesses and successfully supported up the enterprise development ladder by the bank.

In short, BCC’s success will be measured when small trader clients evolve into medium enterprises, medium enterprises grow into national corporates, or national corporates expand into trans-regional entities.

Growing market share across Standard Bank’s key Southern African markets by targeting traders, importers or spaza shops with turn overs between ZAR 30 000 and ZAR 300 000 will also have a measurable positive impact on economic growth, employment, and inclusion in the region.

The socioeconomic impact of this kind of ecosystem thinking augmented by direct support will multiply as the regions’ businesses become bigger and more diverse, defining and sustaining the kind of economic expansion and broad-based employment on which long term prosperity, stability and security is built.

ENDS
Leina Gabaraane is Head of Standard Bank’s Southern Africa Business & Commercial Clients division