GroFin challenges SMEs to look beyond banks
The Investment Executive of impact investing company GroFin, Mr Samuel Sedegah, has called on small and medium enterprises (SMEs) not to be deterred by the often-high cost of credit in the traditional banking system.
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He said GroFin, which provides long-term, patient and affordable financing, was prepared to partner with SMEs to give their businesses the lease of life they deserved.
“Our aim is to assist SMEs with risk finance to be able to grow their businesses. We’ve done this over the years and have a number of clients in Ghana, including those which have exited,” Mr Sedegah said in an interaction with the Daily Graphic.
The interaction was at a one-day seminar GroFin organised for advisory companies and fund managers registered with the Securities and Exchange Commission (SEC) to give them a peek into GroFin’s operations so that they could in turn inform their clients that needed financing.
Support services
Mr Sedegah stated that GroFin did not only provide patient funding, but accompanied it with business support, which enabled the SMEs to run more effectively and competitively in the long run.
The SME financier tailors its business support services to help SMEs and entrepreneurs to address strategic and operational pitfalls that limit growth, which include helping them to reduce risk, assisting them to meet social, environmental and governance issues, improving their accounting systems, as well as recommending marketing and operations improvements for their businesses.
Portfolio
Currently, GroFin has over 60 clients with an average size of $400,000 in its portfolio that values in excess of $30 million in Ghana.
The impact investor provides a minimum investment amounting to the Ghana cedi equivalent of $100,000 and up to $1,500,000, with a minimum of three years pay-back period and a maximum of eight years.
This kind of financing is structured to capture SMEs who are considered too advanced for microfinancing and not big enough for obtaining financing from banks. The repayments are done in the local currency, except where the client generates foreign exchange or prefers otherwise.
“Access to finance for SMEs may be a challenge but we also believe that it goes beyond that. The knowledge and awareness of where to access appropriate financing is also a major challenge for them,” Mr Sedegah posited, adding, “I know about a lot of funds in the country that most SMEs are not aware of.”
He declared: “The SMEs should disabuse their minds that access to finance is a limitation to their business; GroFin is ready to provide the access and appropriate financing for them to grow their businesses.”
The GroFin’s Investment Executive said SMEs that had worked with them had seen tremendous growth in their businesses as their approach was different from traditional banks. “We don’t run accounts like the banks, we disburse and they pay on time,” Mr Sedegah stated.
Traditionally, business people believe that whenever it is about funding, it has to do with the banks. But Mr Sedegah believes there was lots of structured funding outside the banking system most appropriate for the SME ventures that were not being accessed.