Small & Growing Businesses (SGBs) have been acknowledged as an engine of growth in many economies such that informal enterprises account for 60% – 70% of total employment in emerging economies. In Nigeria, small & growing businesses account for 70% of industrial employment and well above 50% of GDP. Despite this significant contribution to the economy, access to a formal financial system by small & growing businesses are limited due to imperfect information, perceived high transaction cost of smaller loan amounts and high risk. Small businesses on their part are reluctant to obtain loans due to lack of collateral, untimely delivery of credit and high interest rate.
Diamond Bank has embraced the challenge of serving small & growing businesses by setting up a focused unit within its retail propositions group to drive Micro Small and Medium scale Enterprises (MSME) initiatives. To effectively downscale these initiatives, each Diamond Bank branch has a dedicated relationship manager trained to manage the banks’ MSME service offerings. The banks’ MSME Propositions team recognize that finance is not the only need of small & growing businesses and develops interventions that go beyond the traditional services available in the banking industry.
Efforts to improve management capacity in small businesses include the 24 business seminars that have been held in different cities across Nigerias 6 geopolitical zones. The central theme of these seminars have been to educate promoters of small enterprises on best practices for success and these seminars are delivered by proven entrepreneurs with a track record of organic growth of their businesses. The forum also creates networking opportunities for small businesses and start-ups.
In addition to these seminars, and in recognition of the limited expertise of small business promoters in functional management disciplines, 7 Business clinics have been organised in major commercial cities across Nigeria. These business clinics provided small business owners an opportunity to have consulting/advisory sessions with professionals and consultants on the diverse business challenges they face in running their enterprises.
One of the bank’s CSR initiatives, Building an Entrepreneurs Today (BET) in partnership with Pan University’s Enterprise Development Centre, is in its second season and has provided management training to 100 entrepreneurs and awarded N30Million in grants to the best 10 businesses.
Networking sessions such as Diamond Business Club, access to internet services (website creation) and the recent selection of 5 customers for an all expenses paid trip to the October 2012 CHINA CANTON FAIR are value added services for small business promoters to improve access to market opportunities and encourage business growth.
Also, linkages and partnerships with organizations such as IFC, SMEDAN, DFID, USAID, and other multilateral organisations are aggressively sought to pool funds for financing, reduce high interest rates, lower business risk, improve business climate, improve business processes and improve management capacity of small business promoters.
The Mediloan project (in partnership with USAID) is one of such partnerships to develop small & growing businesses in the health care sector. The bank also is highly supportive of Market Access Nigeria, an initiative by the Ministry of Trade & Investment to promote market linkages and synergy between small & growing businesses in Nigeria and large corporates & multinationals.
Diamond Bank’s MSME traditional banking product interventions recognises the unique needs of small & growing businesses such as access to finance, cost control, and surplus cash management. In view of this, the bank uses a unique methodology that enables lending to businesses without collateral or security. N69.2 Billion has been disbursed small businesses using this methodology.
Furthermore, the Diamond BusinessXpress Account a current account for small businesses (with variants BASIC, GROWING & ESTABLISHED) recognize that the fee structure of most banks may erode already constrained profits of small businesses and adopts a fixed fee structure relative to the businesses size or monthly turnover limits (N4Mn, N12M & N40M for BASIC, GROWING & ESTABLISHED variants respectively).
Each variant has an appendage account where surplus business cash is reserved to earn attractive returns until required. Customers are eligible to access the bank’s financial and non-financial service offerings through their DiamondXpress account variants.
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