BY SILAS APOLLO
Small and medium-enterprise businesses should take advantage of concessional loans instead of the much more expensive regular ones to grow their businesses. This is according to some experts and business leaders who argue that a loan whose terms are more favourable than a borrower could obtain in the market place and more flexible (concessionaire loans), is better than the regular loans.
Ms Jana Lessenich, chief executive officer of Yunus Social Business, says that concessionaire loan pricing and flexible repayment structures are key pillars in recovering a country’s socioeconomic achievements and building flourishing low-income households.
This, she argues, is achievable through willingness of corporate socioeconomic business entities to empower small business enterprises. She was speaking at a panel discussion on funding the next wave of changemakers, which was recently held at the Tangaza University College.
Ms Lessenich, who is also an impact-driven professional and who doubles as a member of investment committee of InsuResilience Investment Fund stresses the need for modern social business to impute critical value of social media engagement.
“The world has to know the kind of sound business you are engaged in. Social Media is the best tool to create an adaptive profile to the target customers in the community and package a message that will put your products on attractive scale,” said Ms Lessenich.
Yunus Funds grows local social businesses that provide employment, education, healthcare, clean water and clean energy to over 17 million people by turning donations into investments in social businesses which are reinvested.
Other speakers at the event, like Mr James Ododa, chief executive officer and co-founder of Ndivisi, narrated how he struggled to raise funding from commercial institutions as they had high collateral requirements.
He therefore got donations from families and friends among others to support his business idea.
“Our fundraising journey began with seeking bank loans but collateral requirements posed a major challenge. We therefore got funds from donations made by families and friends,” said Mr Ododa.
“This was to prove the concept to ourselves during the ideation phase which took us some time. This gave us a chance to know how to scale from one point to another.
Ms Molly Brown, head of carbon strategy at BURN manufacturing, stated that developing the core reason to raise the money are fundamental ingredients for the success of small businesses.
She says that a business that is in consonance with customers’ demands and one that attains profitability is better placed to be able to pay back the capital that has been borrowed.
The director of program operations, Grameen Foundation, Mr Alfred Kojo Yeboah, underlined the need to set up many independent micro-units in informal settlements as a major contributor to initial capital for a small business enterprise to thrive through a competitive world dominated by corporates.
“Carefully creating a business investment and dignified jobs through marketing of products and services in the country, the sale of hygienic products and development of a steady flow of income revenue is what I believe reciprocates to a successful small business,” said Mr Yeboah.
Other speakers such as Ms Susan W. Ngalawa, regional director, East Africa for Yunus Social Business, argued: “The factors that we look at are the impact, sustainability and the scalability of the business. Creating solutions that create value for the customers at a price that is affordable whilst still being able to cover ones’ costs is essential.”
The panel sought to provide insights into the journey of raising capital for small businesses both from a social business perspective and an investor’s view.
According to a landscape study conducted by Yunus Social Business and IKEA Foundation, only 50% of the 43 social businesses surveyed were able to raise any capital.
This is due to the ‘missing-middle’-phenomenon, where social businesses and SMEs are too big to satisfy their funding needs by own or family capital and too small for commercial or private capital.
