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Sierra Leone Business: Financial institutions need product development capacity –ILO Paul Mayanga

If Sierra Leone is to accelerate access to finance two key players need to be supported which are the micro, small and medium enterprises (MSMEs) and the microfinance institutions (MFIs) that deliver the financial services.  This is the position of Paul Mayanga, Representative of the International Labour Organisation, speaking recently on the topic “Accelerating Access to finance for SME’s —enhancing the capacity of Microfinance Institutions.”  He maintained that there is need to consider enhancing access to finance, by ensuring that the business environment has laws and regulations that can support the growth of MSMEs  or Micro Finance Institutions (MFI’s) because without those it will be impossible for the financial institutions to deliver financial services. Another key area that has to be supported in order to enhance success to finance is developing the skills of entrepreneurs to manage their businesses and finances. This can only be effective if the financial institutions can come up with appropriate products that the entrepreneurs will be able to access. The ILO Rep. further stated that in the past especially with banks when they give out loans they need the payment the following week. “As we have heard from microcredit clients stories, there are people who travel and have to do business beyond the borders of this country” he said “how do you expect them to have to repay a loan within a week’s time? So you need to build financial institutions capacities in terms of product development that will assist the process so that the entrepreneurs will be able to benefit from the finance.” He also identified long term funding gaps for MFIs, their current lending attracts high interest rates when they borrow from abroad and if they are to lend beneficiaries the rate will also be high. The ILO Rep said that he is of the view that there is need to access long term financing and also have products that are client centric. In addition financial institutions should also be thinking of risk management mechanisms such as guarantee facilities and insurance. Access to market he said is also important whilst noting that if MSMEs bring their products and they are not able to market them, then they will not be able to demand for services that will include financial services.

By Zainab Iyamide Joaque

Monday May 20, 2019.

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