ABSA Providing Uncollaterised Funds for African SME Operators

African Small and Medium Scale Entreprises (SMEs) are confronted with various challenges, ranging from lack of market access to lack of access to finance and business development. To address these challenges, ABSA is providing uncollateralized funds known as Enterprise & Supply Chain Development (ESD), for SME operators on the African continent.

“The funds are for local companies, suppliers and distributors that are involved in the corporate value chain,” said Mr David Mparutsa, Head of Enterprise & Supply Chain Development, Absa Regional Operations.

According to Mparutsa, the bank provides all Products that banks are offering under its business banking unit, adding that it has
a strong focus on access based financing especially in the oil and gas industry.

“For instance, if there is an SME who won a contract from the IOCs. The SME requires funding to be able to deliver the contract. On this note, we will be able to finance the SME based on the terms and conditions of the contract without requesting collateral and bank statements,” Mparutsa said.

“We have very good asset-based financing products to ensure that SME can acquire the asset to be able to deliver contracts. We also provide Purchase Order Finance and working capital solutions.”

He also informed that the bank is currently working on building a product that will allow entrepreneurs in Africa to be able to take up equity stakes in existing companies.

On the benefits of the ESD programme, Mparutsa said that it will allow SMEs to meet with Local Content legislative requirements, adding that it has no negative impacts on SMEs.

“In terms of benefits for the ESD program, the Enterprise and Supply Chain Development Programs (ESD) will allow SMEs to meet with the legislative local content requirement. We can offer non-collateralized lending at preferential rates; access to business development skills and technical capacitation; access to technologies and market development.

“We aren’t just offering to fund but we are offering affordable financing to suppliers and contractors participating in these value chains.

“Another important point is that there is no negative impact on SMEs. The risks we take on is the risk of the suppliers. And if there is a default on a particular facility, we will not go knocking on the corporate door. The risks are managed completely by the supplier that we have financed.

“From the SME point of view, I think the benefits are quite easy. SMEs will get access to finance, mentorship, business

development skills among others to help grow their businesses to become a multinational company in the African region,” he said.

According to him, “ABSA has dedicated resources for ESD in all present markets to fund as many SMEs and with dedicated teams in Uganda, Kenya, Tanzania, Mozambique, Botswana, Zambia, Ghana, South Africa.”

Mparutsa noted that ESD goes beyond banking and funding support through the provision of non-financial support (Business Development Support) and Post Loan Management.

He also said that ABSA has concluded a 4-year sponsorship of Enterprise Development Centre (EDC) for four partners operating in the Uzuma LNG in Mozambique, adding that the mandate is to train over 1,000 SMEs over four years.

“For Local Content, our local content strategy is centralised around six pillars. The first one is Financial Support, Access to Market, Key Sponsorship, Skills & Business Development, Partnerships, and Thought Leadership events.

“ABSA Concludes 4 Years Sponsorship of Enterprise Development Centre for the Area Four Partners Operating in the Rovuma LNG project in Mozambique.

“Area Four will be operated by JV ExxonMobil, Eni, CNPC, and the EDC will be managed by a local company called Mozap.

“The mandate of this Enterprise Development Centre is to train over 1,000 SMEs over four years to acquire business skills after which they will be certified on International Training Certifications,” he said.

He added, “Focus on Pipelines and Major Projects. A special focus on the major projects in East Africa exploring current updates, challenges due to COVID. Opportunity for National & International service companies to share experience and discuss thoughts for next steps in project delivery. – $3.5 Billion in East African Crude Oil Pipeline – Refinery Projects in East Africa – The Rovuma Basin – Mozambique LNG – Coral South Floating LNG – Tanzania Liquefied Natural Gas Project (TLNGP).”