Helping Liberia’s Banks Better Serve the Country’s SMEs
Fragile and conflict affected countries almost always face enormous development challenges, from restoring trust and confidence among their populations to rebuilding infrastructure and attracting investment.
These countries, though absorbed by many problems, shouldn’t overlook the importance of supporting smaller businesses, anchors of employment that are often starved of funds and training opportunities.
In Liberia, a country recovering from a long civil war and that is focused on strengthening its private sector, IFC is working with a number of commercial banks to help them expand their SME Banking services and build a large SME portfolio.
An IFC training program recently held in Monrovia attracted senior representatives from seven of the nine commercial banks currently operating in the country. The training covered topics that helped participants understand the difference between corporate banking and SME banking with an emphasis on the special needs of SMEs, and how to tailor banking products specifically for the SME market.
“The program was a great learning experience for me,” said Priscilla Akua Vitoh from Guaranty Trust Bank, one of 28 participants at the event. “My team and I are already putting things in place to start our own small SME program using what I learnt. I will recommend a bank-wide adaptation when what we are doing starts to show good results.”
Tough Situation For Liberian entrepreneurs, the sooner the country’s banks are better equipped to support them, the better.
Only about 14,000 small businesses are formally registered in Liberia and less than twenty percent are accessing finance. The country’s banks, wary of non-performing loans and often unprepared to serve smaller businesses generally require about 150 percent collateral for loans, a prohibitive amount for most businessmen and women.
The tough situation means that even Liberia’s best and hardest-working entrepreneurs struggle to expand their businesses, take on more employees, or enter new markets.
The training, which will help IFC design advisory programs for Liberia’s banks, is just one way IFC is supporting private sector growth in the country.
IFC helped Liberia launch a business registry that has cut the time it takes to register a business from 99 days to only 48 hours, and an IFC-supported commercial code and court are speeding the resolution of commercial disputes in Liberia, improving the investment climate and making it easier for businesses to do business.
Liberia is also one of eight countries supported by IFC’s Conflict Affected States in Africa Initiative (CASA), which is helping strengthen the private sector in countries recovering from conflict.
“Smaller businesses will play a pivotal role in Liberia’s recovery, but they can only contribute to economic growth if they receive the training and financing they need to grow," said Frank Ajilore, IFC Liberia Resident Representative. “IFC is helping to show Liberia’s commercial banks the importance of the SME sector, and how to develop Banking Services for this market in Liberia.”