IBEX Identifies SMEs’ Challenges, Opportunities for Accessing Finance

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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.

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