Banks must explore alternatives to restore liquidity to SMEs post-DDEP - Dr. Arthur-Annobil

The Strategy Lead & Business Manager (Business & Commercial Clients) at Stanbic Bank Ghana, Dr. Kweku Arthur-Annobil, has urged banks to explore alternative funding sources to support SMEs in the face of declining commercial bank funding for businesses.

Dr. Arthur-Annobil said this at a stakeholder conference on the theme ‘Restoring Commercial Bank’s Liquidity for SME Financing post-DDEP: The Role of Impact Investing.’

Speaking on options available to commercial banks to restore their liquidity in order to support SME growth, Dr. Arthur-Annobil said, “For me, two options are available.

One, banks should try as much as possible to partner with impact investment funds, by so doing, they can leverage their capital and share the risk involved based on the kind of structure they have. I know some banks that are doing this and it’s achieving results.

The second thing for me is ecosystem banking. This requires not just banking with big local companies and multinationals but banking the entire value chains of these businesses. So, all the small businesses that are plugged into the big businesses.

If a bank does this, it can structure some facilities that enable it to lend to the small businesses that ordinarily may not have access to funding”.
Dr. Arthur-Annobil commented on the funding difficulties SMEs face in the country and how both banks and SMEs can work together to navigate the current turbulent economic circumstances.

He said, “I don’t blame SMEs entirely but the difficulty lies with structures such bookkeeping, management, and especially sole proprietorship where there’s a huge difficulty with businesses distinguishing themselves from their businesses.”

Beyond traditional banking, Dr. Arthur-Annobil stressed the need for stakeholders to build a functioning entrepreneurial finance ecosystem to address the huge funding gap for SMEs and early-stage startup businesses.

He mentioned the need for the central bank and the SEC to develop frameworks around Regulatory Techs to enable both the operations and financing of small businesses through alternative funding sources like angel investing and crowdfunding.

Dr. Arthur-Annobil also mentioned that big corporate firms should take an interest in establishing Corporate Venture Capital firms to help finance the works of early-stage startups to help them grow.

The stakeholder conference brought together financial experts and members of the academia to discuss funding and liquidity issues for both banks and SMEs posts the DDEP. The meeting also provided insights into the challenges commercial banks face and Central banks’ efforts to help commercial banks.

The panelist for the discussion was Mrs. Doris Ahiati, Financial Consultant, Mr. Clifford Duke Mettle, Chairman, of the Banking Commission, Ghana, and Dr. Francis Atsu, Head of GIMPA Enterprise Risk Management.