On the re-opening of SLPP Office … “We would never encourage violence” John Benjamin...

Sierra Leone Business: Access to finance a challenge for SMEs

In their presentation at the Policy Hearings, the Small and Medium Enterprises Development Agency (SMEDA) said that they came up with lots of findings in their drive to understand how the sector works. Presenting their key statistics, Finance Officer James Karrow Kamara said that access to finance is their priority need for SMEs, even though they have very good business plans but there is no money to finance them as bank collaterals are a challenge. Additionally, another priority need is business development and market access and they were asked on how they raise their capital. Training, Kamara said is important as they have a lot of industry doing handy works, some of the farmers he said will have their goods but the market access is a problem, the question of how they move their goods to the big towns is an enormous challenge. The micro finance institutions and community banks are their big sources of raising capital and also through Osusu, “Osusu is very risky and private investment is also very small, so going forward if we are to give finances to these SMEs we need to know how are we going to target them” Kamara said. The commercial banks and development partners are smaller sources that are creeping into sources of finance as SMEs is now the vogue, “all of these NGOs attract funding from overseas in the name of small and medium enterprises so they are almost matching the commercial banks in terms of giving out loans” he said. Out of 3,000 SMEs interviewed they were categorized by industry type with commerce accounting for 55 percent of those who buy and sell second to agriculture. According to Finance Officer James Karrow Kamara he said that a look at the different types like construction, fisheries, logistics, services, transport and manufacturing which is very low, show that we are not adding value to our produce. And that for all other businesses they go to China and other countries. “So we need to improve on value addition, this data will inform us as to which sector to pay attention to even though the commerce sector involves lot of people, but what is the value they will bring to the country” he asked? He recalled that during the Ebola outbreak a lot of people were not able to go to China to buy goods, “but if we have our manufacturing companies here and they manufacture goods from our own produce that will help the county.” SMEDA also asked about industry by geographical spread as they discovered that 50 percent are in the Western Area as everyone is coming to Freetown to do business. Funding from donors he added is decreasing and as such government need to generate funds for itself, “but how will the government generate funds for itself when there are no businesses and those that are there are in the informal sector?” These SMEs he said will not be able to tap into government resources because if they are in the informal sector they will not be able to participate in government expenditure processes because they are not registered. “This means that they will not be able to participate, that is why we are saying foreigners are taking over the businesses because most of the businesses run by Sierra Leoneans are not registered. You see a very big shop but when you ask them for their registration paper, NRA certificate or FCC they don’t have it, so this is the reason why we need to develop SMEs.”

By Zainab Iyamide Joaque

Monday September 24, 2018.

Comments are closed.