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Factors influencing entrepreneurs’ ability to access finance from banks
Graham Erasmus Head: Sales, Channel & Segment Management for Nedbank Small Business Services
Johannesburg; 3 May 2011- The Africa SME banking conference currently taking place at the Sandton Convention Centre hosted by the IFC, a member of the World Bank Group today heard Graham Erasmus, Head of Sales, Channel & Segment Management at Nedbank who gave a talk on the challenges and common factors influencing entrepreneurs’ ability to access finance from banks.
“It’s always a daunting task to start any business, with the constant reminder that most businesses fail to access funding from banks due to and amongst other reasons, gaps in business plans, proven viability that an idea can work, inadequate cash flow projections and lack of business skills,” says Erasmus.
According to research conducted by an independent company BMI and the competition commission into retail banking, statistics indicate that only 24% of startup businesses are funded through banks while 49% through an entrepreneur’s own savings. Further research illustrates, that the main constraints faced by entrepreneurs when starting a business are related to crime and corruption, fear of business failure, the escalating cost of electricity, access to finance, skills and training.
“More importantly, the critical success factor to help enable entrepreneurs succeed is highly dependent on practical and expert advice. While the majority of entrepreneurs attend industry and bank seminars, only a few have a mentor or coach to help them see it through. Training to up skill entrepreneurs through effective management, business planning and financial cash flow provides an opportunity to support small businesses. We welcome government’s focus to meet key national objectives in entrepreneurship growth and job creation to address some of the challenges faced by the SME sector,” states Erasmus.
In countries such as Brazil and India where government plays a highly facilitator role, entrepreneurship has become the major driver in those economies. With South Africa recently becoming a member of BRIC, this is set to provide greater market opportunities. Successful entrepreneurship can certainly benefit from collaboration between government, banks and the SME sector.
“For the seventh consecutive year, Nedbank continues to provide free small business seminars across the country, mentorship, business registration, free transactional banking, free financial training for franchisees and an online networking portal aimed at growing the SME sector in South Africa for the much needed growth of our economy,” concluded Erasmus.
ENDS
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit www.ifc.org
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About Nedbank
Nedbank Group Limited (‘Nedbank Group’) is a bank holding company, with its principal banking subsidiary being Nedbank Limited. The company’s ordinary shares have been listed on JSE Limited since 1969. Nedbank Group is South Africa’s fourth largest banking group measured by assets, with a strong deposit franchise, the second largest retail deposit base, a client-centric wholesale and retail franchise and a substantial and growing Nedbank wealth management offering. The group offers a wide range of wholesale and retail banking services through five main business clusters, namely Nedbank Capital, Nedbank Corporate, Nedbank Business Banking, Nedbank Retail and Nedbank Wealth. Nedbank Group focuses on southern Africa, with the group positioned as a bank for all.
For more information about Nedbank Small Business Services go to: www.netbank.co.za
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