Closing the gap: full suite banking services for SMEs

According to the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA), 95% of businesses in Tanzania are Small and Medium Enterprises (SMEs), which makes the sector an important contributor to the country’s long-term development. With such consideration in mind, recently Stanbic Bank Tanzania launched an SME proposition dubbed Mpambanaji aimed at supporting the growth of the sector.

We sat down with Fredrick Max, Head of Business and commercial clients, to give us insights on the rationale behind the solution, as well as its intended impact on the SMEs sector.

Q: As a bank that is vastly known for its corporate capabilities, why venture into SMEs offering?

This is an interesting question to pose because that is a perception worth addressing. While our expertise and experience providing corporate and Investment banking services is unmatched, we want to extend these services to SMEs, to support the growth and sustainability of the sector.

We cannot underscore enough the importance that the sector has on the Tanzanian economy. Employing more than 5 million people and contributing about 35% to the national Gross Domestic Product (GDP), the sector has huge growth potential.

We intend to be part of that growth, as a partner in business that supports the entire SMEs ecosystem through building capabilities, financial inclusion and tailored beyond banking solutions.

Q: What is the difference between the Mpambanaji proposition and other SMEs offerings in the market?

After years of research to understand the intricacies of the SME sector, we chose to adopt a holistic approach to creating a banking solution that caters to them. This simply means that we have created a full suite solution that addresses challenges that hinder the growth and participation of SMEs in utilising investment opportunities in the country.

Through the Mpambanaji solution, we will provide SME-centred accounts (Mpambanaji account, Vikundi, and Saccos)-whose opening procedures have been streamlined and simplified to increase the SMEs' access to formal banking systems. Also, our clients will have access to the Stanbic Biashara Incubator program which is a capacity-building-centred programme that will equip SMEs with the tools they need to establish sustainable and profitable businesses and thereby increasing their regional and global competitiveness.

Other services include Borderless Banking, Vehicle Asset Finance (VAF), Insurance services, Biashara Exchange, and cash management through Stanbic Wakala and the bank's branch network, digital platforms and debit cards (ATM and e-commerce).

Q: Which SME category does the Mpambanaji proposition target?

There is a wide range of SMEs, from the funky FinTech start-up to family-owned Kioski shops (Duka la mangi), Street hawkers (Wamachinga), Self-employed Masons, Artisans, and other specialised crafts to street food sellers (Mamantilie). We are looking to service each one in their own capacity, to drive inclusive growth and spur financial inclusion across the country.

The solution is aligned with the aspirations of the National Financial Inclusion Framework, which acknowledges financial Inclusion, as one of the key drivers of economic growth. We believe our solution will assist in reducing economic vulnerability for individuals and households, poverty alleviation, and improved quality of life for all people in Tanzania.

Q: What is the rationale between access to finance and SMEs growth?

Access to finance has been identified as a key element for SMEs to succeed in their drive to build productive capacity, compete, create jobs and to contribute to the country’s economy. Without finances, SMEs cannot acquire or absorb new technologies nor can they expand to compete in global markets or even strike business linkages with larger firms.

This is why as a financial institution, we made it our mission to provide solutions that will assist SMEs in addressing their financial challenges as well as exposing them to knowledge and information through financial academies, all to enable them create a good portfolio that will make them be seen as credible to the lenders.

Q: As the government gears the nation to ensure the achievement of industrialisation, how is Stanbic Bank set to ensure that the national goal is attained?

We are committed to supporting and driving the development of this vital sector in order to complement the government’s efforts in transforming Tanzania. Our Mpambanaji solution aligns with the country’s ongoing agenda of ensuring local businesses are equipped with tools to participate in the country's strategic projects.

For example; through our incubator program, currently 50 SMEs are in training, acquiring; Leadership, Finance & Accounts, Taxes, Laws, Contracts, Marketing and Procurement knowledge. All these topics are critical in building and increasing their ability to enter the competitive market and utilise the opportunities available in the country’s strategic projects.