Guest Post by: Tumi Frazier, founder of Tumi Frazier International
Microfinance Institutions are growing in importance in Africa as a source of start-up capital for many entrepreneurs. Furthermore, innovative business models pioneered in East Africa are now spreading across the continent in an attempt to advance traditional microfinance methods; since formal financial markets remain out of reach for many women operating micro and small enterprises.
Faulu Microfinance Bank, a subsidiary of Old Mutual Group, is one of Kenya’s fastest growing banks with a network of over 80 outlets. The bank offers a variety of financial solutions specifically targeted towards entrepreneurs; the loans are flexible, affordable, convenient and accessible for working capital, assets acquisitions, business expansions, imports or exports. The turnaround time on these loan applications is quite impressive. Unlike some of the funding entities in South Africa that take at least 6 – 12 months to process loan applications, Faulu Microfinance Bank has a 12 hour processing duration including interest discount rates of up to 25% for early repayment. How incredible!
In Ghana, Stanbic Bank, the Agricultural Development Bank and Universal Merchant Bank have also adopted different strategies to cater for small businesses. Stanbic for instance introduced the new SME quick loan to overcome the usual challenges that SMEs face when dealing with commercial banks.
The African Development Bank has also partnered with the Danish and Spanish governments and have initiated the African Guarantee Fund to back up loans to small businesses since entrepreneurs are unable to provide the collateral required by traditional banks. The African Guarantee Fund provides loan portfolio guarantees to partner lending institutions including microfinance institutions.
The Dell 2016 Women Entrepreneur Cities Index study indicates that access to capital is still a major challenge for women in Johannesburg, although the city ranked 23 out of 25 global cities with the ability to attract and support female entrepreneurs.
Be that as it may, it is not all doom and gloom; there is a glimpse of hope on the horizon.
So Lionesses, let’s take advantage of the resources available to us on the continent and better yet, let’s take advantage of the business opportunities that exist in the microfinance sector.
Tumi Frazier is a South African entrepreneur, professional speaker, author, TV personality, consultant, and founder of Tumi Frazier International, Tumi Leadership Academy, and Tumi Foundation. Tumi is an internationally acclaimed Leadership and Change Management expert who has worked with high profile clients and organizations across Africa, United States and Europe. Tumi has authored 4 books: Courageous Stories of Inspiration; In the Midst of the Storm; Stepping Stones to Success; and Your Moment. Follow Tumi Twitter | LinkedIn
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