Large micro, small and medium-sized enterprises (Large Micro and SMEs) in Ghana: what are they and what are their needs?
Most Ghanaian Large Micro and SMEs are in trade or services; they sell clothes, phones or street food (“Chop bars”) or are hairdressers or farmers. In Ghana, Large Micro and SMEs have a pressing need for access to finance as traditional banking services are often out of reach for them. They can need loans ranging from €5 k to € 84 k. In a larger context, with 159,989 MSMEs, the finance gap in Ghana amounts to almost €4,4 billion. Some need loans to support their working capital, for example to purchase merchandise from abroad; some will need more long term facilities to invest in equipment or open a new point of sale. Advans has been serving this particular segment for more than 10 years now and proposes tailor made solutions that vary according to each individual’s needs.
What is Advans Ghana’s current offer to Large Micro and SMEs?
Large Micro and SMEs represent a vast and dynamic market in Ghana. However, most of them have difficulties accessing finance as they do not meet bank requirements, with bank loans essentially intended for large companies. Advans targets these small businesses as they are at the heart of our mission to provide financial services to underserved populations. Being present on the field and getting to work closely with different types of businesses helps Advans to better understand and accompany customers in their professional as well as personal life. Because they have a deep understanding of each client’s business and the related risks our Customer Relationship Officers (CROs) advise our clients to help them progressively better structure the financial side of their businesses and anticipate and address risks. This added support on top of the financial services we offer clients is appreciated by our customers and enhances our positive relationship with them.
We also propose additional financial services to support our clients in their financial journey. This includes current accounts with low maintenance fees and savings accounts to enable our clients and their families to save for the future. Moreover, we have developed several different channels to give clients more flexibility. Large Micro and SMEs in Ghana are generally very interested in doorstep banking as it allows them to save time. Most of our Large Micro and SME clients work extended hours with daily sales so they have little time to get to their nearest branch. Advans Ghana has introduced two key services to address this client pain point: firstly, our secure field cash collection service, enabling clients to pay back their loan or save with an agent on the field, and secondly, Mobibank our self-service USSD mobile menu, giving clients the means to check their balance, send and receive mobile money, pay a supplier or pay their bills from a basic phone. In a tense Ghanaian context where financial institutions close down on a regular basis, these additional services give more security to clients and build trust in our institution.
What are the advantages and challenges in working with Large Micro and SMEs?
The main advantage is that Large Micro and SMEs needs are dynamic and diverse and they are a clear motor for economic development in Ghana. Our tailor-made approach to proposing financial services allows us to respond to the majority of their needs in a sustainable manner. Our clients are often not only interested in our loans but also our other services like pay roll for they salary workers, remittances or cheques to pay their suppliers.
One challenge is the fact that this specific segment of customers often has the ambition to grow fast without assessing risks properly. In this regard, Advans Ghana is committed to conducting individual risk assessments and supporting the prevention of over– indebtedness of our customers, as well as ensuring that we raise awareness on good financial management. Another issue is that most competitors base their loan decision on clients’ prior savings where clients have to regularly deposit for several months in order to be eligible for a loan. Because of this clients don’t always understand why we are analysing their business performance before granting a loan. But once they have understood our approach they appreciate our flexibility and capacity to quickly respond to their needs. Finally, some of our clients have low financial literacy and need to be accompanied in their use of financial services. We work to ensure that we communicate transparently with our clients and provide them with support to enable them to make informed choices.
How is Advans Ghana ensuring that it responds to Large Micro and SMEs needs?
We are committed to giving our clients the best customer experience possible. Going forward we are especially focusing on:
1. Reducing response time to clients on their loan applications, to ensure that they can seize opportunities that arise: this includes building on our credit scoring models and progressively digitalising our processes and methodologies but also improving our knowledge of the market and of our clients.
2. Offering products addressing our clients’ personal needs (as well as professional). For example most Large Micro and SME owners want to obtain scholarships for their children. They spend a lot of money on private school and want their children to achieve a higher degree than their own. We support them by proposing savings and loan products to prepare and secure their children’s education.
3. Improving our quality of service: providing services that are available 24/7 through optimising our channels. In a constantly evolving digital landscape, we aim to offer services and channels tailored to our clients’ changing and emerging needs, this means optimising our current channels and seizing opportunities to introduce new ones.
We also have an objective to conduct regular customer surveys to assess our clients’ appreciation of our services as well as offer them trainings to build their capacity on record keeping and social and environmental issues. For example, we regularly organise SME breakfast meetings and SME clinics to support our clients in their business activities and financial management.
Large Micro and SMEs are usually growing fast but are often not formalised, they are not used to dealing with complex financial services and time-consuming procedures. This is why at Advans we develop adapted value propositions taking into account their specific needs. It is through allowing the Large Micro and SMEs that we serve to seize more opportunities and be more reactive that we support their development and guarantee our positive impact on their financial stability.
Thomas Tuffour has been with Advans since January 2009, starting as a Client Officer and going into Branch Management before joining the Operations team. He is presently in charge of Large Micro and SME Segments within the Business Development Department.