The Deputy Chief of Party at the USAID Investing for Business Expansion (IBEX) program has identified key challenges Liberian small-and medium businesses have to overcome in order to access finance from commercial banks and other financial institutions.
Mr. Augustus J. Flomo, IBEX’s deputy COP, said many small and medium enterprises operate informally, lack business and financial performance records; adding, most SMEs do not have in place effective management structures and internal control systems for attracting investors and accessing finance.
He made the statement recently in Monrovia at a one-day “Stakeholders Roundtable on Agricultural Best Practices and Approaches Using Radio as a Primary Medium” organized by USAID Food and Enterprise Development (FED) Liberia program.
The event drew participants from its four project counties– Bong, Nimba, Grand Bassa and Lofa, including six lead farmers, five input suppliers and five community radio journalists.
On the topic “SMEs Access to Finance in Liberia: Challenges, Opportunities and the Way Forward”, he said, “To be able to access finance you have to be prepared.” He added that most businesses that operate in the agriculture and other sectors are informal, and as such, investors and financial institutions, including the banks, are reluctant to lend to them because they have got nothing convincing, according to him, to show and prove that monies borrowed will be repaid.
According to him, the absence of business plans, good administrative systems and track record with the business or financial data scares investors and banks who have investment interests.
The IBEX Deputy Chief also cited bad governance and poor management as other critical SMEs challenges. He said those who have money like the banks give loans to people or businesses with proven financial performance records and abilities to utilize, add value, multiply and pay back their loans.
He said IBEX along with other development partners, including USAID-FED and Building Market, is addressing some of those SMEs challenges by providing free financial and technical services that include training, advising, coaching, mentoring, business planning, management and basic record keeping, loan packaging and referring to the banks those that are prepared and able to present themselves.
IBEX, he said is leading an initiative in partnership with the Liberian Government through the Ministry of Commerce and Industry and the National Investment Commission (NIC) and other business development service providers for setting up a business development and advisory center in Monrovia where SMEs can go to access financial services even long after IBEX phases out.