1 / 19

TBN 14 May 2010

TBN 14 May 2010. Developing SMEs: a case study in transformational investment Peter Hinton SDG. Typical SME: Modern Radiators. Personal History. Africa Trading. MNCs. Affluent. Affluent. Corporates. Middle income. Mid . Mid . –. –. lower income. lower income. Micro finance.

ryder
Download Presentation

TBN 14 May 2010

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. TBN 14 May 2010 Developing SMEs: a case study in transformational investment Peter Hinton SDG

  2. Typical SME: Modern Radiators

  3. Personal History Africa Trading

  4. MNCs Affluent Affluent Corporates Middle income Mid Mid – – lower income lower income Micro finance Micro finance Micro finance Poor Poor Missing middle opportunity Banking opportunity Over served Emerging propositions SMEs, Unbanked, Home buyers Missing Middle Missing Middle Neglected opportunity Donor focus Potential clients Demographic Impact Less than $2bn in actively managed investment funds specifically target the SME sector, compared with over $6bn invested in microfinance sector

  5. The majority of SMEs identify access to finance a major constraint Source: World Bank Enterprise Surveys. 2008

  6. While SMEs tend to be banked, less than 30% have access to credit Source: World Bank Enterprise Surveys. 2008

  7. Women SMEs • Access to credit in Kenya & Uganda

  8. Microfinance vs. SME finance Microfinance customer SME customer

  9. SME finance vs. Microfinance:Job creation $1 of SME finance creates 3 times more jobs than microfinance Source: a Averages for Sub-Saharan Africa based on 159 institutions surveyed in MixMarket 2008 Microbanking Bulletin b SDG estimates based on 2008 financial reports for 4 institutions in E. Africa: Development Finance Corporation Uganda and Finabank Group in Kenya, Rwanda, Uganda C SEAF estimate 26% annual employment growth; These calculations assume SME average employment of 20 with annual growth rate of 20%

  10. SME finance vs. Microfinance:Financial statistics Source: a Averages for Sub-Saharan Africa based on 159 institutions surveyed MixMarket 2008 Microbanking Bulletin; Deutsche Bank 2007 report b SDG estimates based on 2008 financial reports for 4 institutions in E. Africa: Development Finance Corporation Uganda and Finabank Group in Kenya, Rwanda, Uganda; IFC 2007

  11. ‘Missing Middle’ Finance drives sustainable economic growth • Expansion of formal financial inclusion for : • SMEs and SME employees • Unbanked • Low- /middle-income homebuyers • Deepening of financial market and enhancing country financial structure • Strengthen capacity of management and employees of FIs and SMEs • Job creation and contribution to tax base Source: SEAF 2007, From Poverty to Prosperity: Understanding the Impact of Investing in Small and Medium Enterprises

  12. Channels of SME investment • Direct – eg Cocoa farms in Ghana • Through SME funds eg I&P, Fusion • Through MFIs upscaling • Through financial intermediaries eg banks with an SME focus Source: SEAF 2007, From Poverty to Prosperity: Understanding the Impact of Investing in Small and Medium Enterprises

  13. SME Banking:Case study

  14. Governance Marketing Management Branding Controls Balance sheet building Culture/ Leadership Processes & procedures Product range Credit management Risk management Distribution channels SDG Business Model: FI Transformation Transform FI’s into leading local/SME banks Unfocused Under- performing Under- managed Poor Credit Quality Missing Middle Market Focus Small Capital base Weak IT Sub scale 12 Transformation Aspects

  15. SME multiplier effect - latrines

  16. SME Multiplier effect - schools

  17. Impact Investing (10 Years) 1.1Job INVEST $1,000 $6,200 return (IRR 20%)

  18. Conclusion • SMEs are key to development • On the ground contact is key • Banks can be a key channel • Multiplier effect is significant • Commercial returns, development impact

  19. Peter Hinton phinton@summitdevgp.com www.summitdevgp.com

More Related