Blue Financial Services - Supporting Africa's Small Businesses

Wed. September 09, 2009; Posted: 09:06 AM

Blue Financial Services, the micro financier, has established a Small Business Development arm in order to provide support for other small, medium and micro enterprises (SMMEs).

Richard Branson, the entrepreneur best known for his Virgin brand, including Virgin Atlantic Airways and Virgin Records, once said, "Business opportunities are like buses, there's always another one coming."

In Africa the more likely parallel would be the millions of taxis and Okadas (the Nigerian motorcycles, where riders carry passengers for hire) that illustrate the vast opportunities for entrepreneurs in Africa.

Also bear in mind that the small business sector provides more than 95% of Africa's workforce. Blue Financial Services is in itself an example of entrepreneurial success and today the Small Business Development arm of Blue is supporting other small, medium and micro enterprises (SMMEs).

"Blue's SMME division has a holistic approach to entrepreneurs and their businesses," says the head of the division, Kenneth Fisher. "That is, we do not believe in just giving a successful applicant a loan.

We first conduct a viability study of the proposed business. Furthermore, we have set up a formal training programme for the entrepreneurs, which they have to complete and obtain a 50% pass rate, before they receive their funds. We also believe in 'after-care' for these businesses - which means we don't just let them be, once they have received their money - and, so have a pool of mentors and experts who can support the entrepreneurs as their businesses grow and even salvage their business if they hit a rough patch."

It is this complete package that has seen the young division, established only a year ago, achieve great success to date.

"Starting the Small Business Development arm at Blue has been an extremely successful venture. So far, we have held 38 training courses, trained 125 entrepreneurs, created 1,290 direct jobs and supported 6,450 family members on average. And, we have had no bad debts - our arrears are 0.26%.

"I am proud to say that since the inception of our SMME product, we have approved over R73 million in SMME loans. This allocation has mostly been in South Africa and Nigeria, with some in Lesotho and Swaziland. We are due to extend our SMME product reach further by introducing it to the Namibian market in May, and to Botswana in June," says Kenneth.

The division is made up by an experienced team, most with more than 15 years of working in the SMME lending environment. Kenneth believes that this experience has taught the team to proactively seek out projects, and not only wait for applications.

"This makes Blue unique and underpins the Group's value drivers to bring high quality financial services to the under-banked. To date, 83% of our loans have been to existing businesses, and 17% are for start-up businesses."

The division currently grants small business loans from R15,000 to R3-million. These limits will be revised every year, as per the Board's approval, to accommodate inflation and the rising costs of start-up capital. "When we select a business, we stringently look at the viability of the business, entrepreneurial competence, reasonable collateral and own contribution. This is based on extensive weighting and scaling - and is crucial to risk management," says Kenneth.

"For many, having a small business is about survival. In June this year we will start our virtual training. The technology Blue has available makes this possible, and so ourreach into far outlying areas becomes more feasible, and we can make opportunities and dreams for people in these areas a reality," concludes Kenneth.

In June this year, the division is also introducing a new course called the micro-MBA, which covers both semi-formal and formal businesses.

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