By Chinwendu Obienyi

Small and medium-sized enterprises (SMEs) are the backbone of many economies around the world including Nigeria.

Over the last five years for instance, the SME ecosystem, as a central pillars of the Nigerian economy, has contributed about 48 per cent to the nation’s GDP, accounting for about 50 per cent of industrial jobs and nearly 90 per cent of the manufacturing sector, according to the National Bureau of Statistics (NBS).

As one-fifth of global banking revenues, SMEs generate around $850 billion of annual revenue for banks- a pool expected to grow by approximately 7 per cent annually over the next seven years.

This means that they (SMEs) offer vast potential and the projected growth is expected to come from deposits, lending, overdrafts, and payments which constitute about 20 per cent of all banking revenues.

But despite its significance, the SME segment typically appears unattractive because of its relatively low return on equity (ROE), (about 7 to 8 per cent ) for traditional players. Although the narrative is slowly changing, it can be said that serving SMEs is relatively costly as they typically generate lower revenue opportunities per head than commercial clients.

Furthermore, credit profiles and data for SMEs are more difficult to find, and in an economic downturn, poorly designed credit models can lead to substantial loan losses. The year 2020 is a typical example as the COVID-19 pandemic made small businesses lose a whole deal of money owing to the lockdown and restriction of movement globally.

Aside from the N100 billion credit support for the health sector as the frontline soldiers in the fight against COVID-19, in March 2020, the Federal Government through the Central Bank (CBN) introduced the N50 billion Targeted Credit Facility (TCF) as a stimulus package to support households, Micro, Small and Medium Enterprises (MSMEs) affected by the pandemic.

Amidst this initiative, it is however clear that small businesses are still struggling to get access to adequate financing and lending products are often unable to meet their needs, such as quick and seamless applications.  It is against this backdrop that Nigeria’s premier and leading financial inclusion services provider, First Bank of Nigeria Limited, launched its product offering tagged “FirstSME” to support SMEs bid for sustenance and expansion of their businesses.

The FirstSME account which was launched in August 2020 is a tailor-made current account open to SMEs including associations, religious bodies among others to help grow their businesses at zero cost.

The offering which comes in two variants – FirstSME Classic and FirstSME Deluxe – is targeted at all non-individual entities like Limited liability Companies, Public sector institutions, Enterprises/Sole proprietorships, Partnerships & Associations, Religious Bodies, Traders, NGO to mention a few.

The FirstSME Classic is a specially designed account for small scale enterprises providing the support a business owner needs to grow and scale his/her business with a minimum operating balance of N50,000 and to apply for such an account, it is advisable to visit the bank to open the account.

Related News

On the other hand, the FirstSME Deluxe is a specially designed account for medium scale enterprises providing the business owner the support of growing and scaling his/her business with a minimum operating balance of N500,000.

Features and advantages of FirstSME

The advantages and features of these accounts include; access to Temporary OverDrafts (TODs) and other facilities subject to meeting Risk Adjustment Capital (RAC) of each product; immediate enrollment on all digital platform; free access to FirstBank SME events; free access to extensive business promotional and networking opportunities on the SMEConnect portal; access to a wide range of discounted and promotional offers.

Amongst the many opportunities available to holders of FirstSME accounts is the SMEConnect initiative of First Bank which is a platform through which SMEs access the Bank’s unique propositions that will equip them with the essential tools needed for the growth of their business. The SMEConnect portal is also designed to help SMEs identify various gaps that hinder their business growth.

Following extensive research by the Bank, 7 strategic pillars have been considered essential for the sustainability and growth of SMEs. The 7 pillars – connect to infrastructure, connect to talent, capacity building, connect to policy and regulation, connect to resources, connect to market as well as connect to finance.

Speaking on the launch of the FirstSME, Chief Executive Officer of First Bank, Dr. Adesola Adeduntan, said the bank is delighted to unlock several opportunities for SMEs to thrive.

He added that the FirstSME account is one of the numerous opportunities designed to empower SMEs to continually drive impact as the backbone and contributors to employment and economic growth.

“Being woven into the fabric of the society for close to 126 years means that we remain at the forefront of providing the desired financial products and services to fit the needs unique to the SMEs as well as facilitating the requisite tools and resources to efficiently and effectively drive business sustainability and expansion strategies essential to taking SMEs to the next level”, Adeduntan said.

This means that the impact of the initiative on beneficiaries as well as the economy will be reduced cost of operating corporate accounts which frees up funds for the beneficiaries to grow their businesses faster and will result in increased growth of SMEs.

Conclusion

With over 126 years of impacting the economy, the First Bank SME innovative business diagnostics tool helps proffer tailored solutions, whilst creating avenues for business improvement, profitability and sustainability.