Having Nigerian SME's in Mind
The Role of MicroFinance Banks in SME Development
It has been estimated that over 500 million economically active poor people in the world operating micro-enterprises and small businesses (Women’s World Banking 1995). Most of them do not have access to adequate financial services
In Nigeria, not up to 40% of SME’s have access to adequate financial services. The need to bridge this gap leads to establishment and subsequent proliferation of Micro-finance Banks.
Financial servicesGenerally include savings and credit; however, some micro-finance banks like Pillar MFB also provide mobile banking and payment services. In addition to financial inter-mediation, MFB’s (like Pillar MFB) provide social inter-mediation services such as customers forum; group formation, development of self confidence as well as training in financial literacy and management capabilities. Thus the definition of micro-finance often includes both financial inter-mediation and social inter-mediation. Micro-finance is not simply banking; it is a developmental tool for SME’s. Although some MFB’s such as Pillar MFB provide enterprise development services, such as skills training and marketing as well as social services such as literacy training, educational scholarships and health care, these are generally not included in the definition of MFB’s
Micro-finance activitiesIn relation to SME’s usually involve;
- Small loans, typically for working capital
- Informal appraisal of borrowers and investments.
- Collateral substitutes, such as guarantees, sales invoice or compulsory savings
- Access to repeat and larger loans, based on repayment performance
- Streamlined loan disbursement and monitoring.
- Secure savings products and etc.
In addition to the aforementioned activities, Pillar MFB also renders below essential services to our esteemed SME customers;
- Assist customers in terms of client referrals, direct patronage of their products and other marketing endeavors with regards to customers’ product and services.
- We render financial and management advisory services.
- Assist our customers to register their companies or business names with CAC
- Cash pick-up and delivery services to our customers
- Carry out seamless funds transfers to any location or bank within the country for our customers.