by Garreth Bloor

Enterprise development

A new era for SMEs

SMEs are the driving force behind economic development
small business.jpg

While corporate social responsibility advocates have called for greater philanthropic investment into small businesses, economists and investors are increasingly making the case for 'pure business'.

Mail & Guardian ‘thought leader’ Graunt Kruger, in comments captured on, is at the forefront of a simple value proposition: an economy where 70% of all jobs come from SMEs and where unemployment is one of our most pressing challenges.

The banking sector is keen and able to address the obstacles faced by entrepreneurs and make a substantial contribution to growing enterprise development.

Kruger is the head of enterprise development at Standard Bank and a member of the Critical Research in Consumer Culture team. He argues that Standard Bank enterprise development is taking “a holistic approach to assisting budding entrepreneurs by giving them access to finance as well as business mentorship”.

While his employer is by no means the only bank responding to these needs, it is certainly one of the leading pioneers.

Kruger is one of M&G’s 300 'Young South Africans you have to take to lunch', building a name outside the company before moving into it.

He joined Standard Bank Community Banking in 2008, then a new division meant to build banking solutions of the future by creating sustainable services for the unbanked and underbanked..

Though Standard Bank has been involved with SMEs in its South African market for a long time, “its aggressive targeting of SMEs in Africa outside South Africa (its home market) is new” – a reflection of the continent-wide potential of SMEs, and not just in South Africa.

This repositioning has seen the bank grow SME financing in Africa from zero to more than R298 million in the space of seven months and “provides unsecured micro-loans between R2 709 and R270 981 for periods of three to 12 months", according to figures reported on

“Standard Bank’s success has come as a result of approaching SMEs in a uniquely different way than the norm, according to independent assessments.

"Firstly, having worked in Africa for several years, the bank has seen and recognised the funding gap and the potentials offered,” noted the report.

“It has also invested time and resources in gaining more information about SMEs in Africa and how they function. It has developed an understanding of the seemingly chaotic sector and has recognised the order and potential behind the chaos.”

So what has been behind the shift in profitability from corporate social investment (CSI) to market-based fundamentals yielding solid businesses performances?

“Perhaps one of the bank’s greatest successes has been in the area of changing the mindset of its own people within the bank toward SMEs.

“Internally, their people have been helped to imbibe the concept of not trying to conform the SMEs to the bank, but conforming the bank to the SMEs,” a report on said. The news website cites an internal mindset change as a driver that has recognised the need for greater access to customers by locating pay points and banks much nearer together – an approach welcomed by customers.

“It is common to see Standard Bank personnel in corporate attire, working the dusty streets in African neighbourhoods and street markets. They visit and spend time with clients,” the report added. “Relationship managers from the bank interact with their clients on a regular basis.”

Judging by the strategy, it seems employing younger professionals with fresh approaches are assisting in the evolution of new customer service styles, while constant learning remains a key adaptation technique in the financial industry.

Stepping out of pure finance into the realm of social science disciplines may be reflecting the move of CSI and social objectives into mainstream business strategies.

As a recognised ‘thought leader’, Kruger is a regular guest speaker and panellist, recently addressing the Enterprise Development Conference hosted by Anglo American.

Despite the profitability, with market economies often providing an edge for those who have acquired assets, Standard Bank is not shy to list developmental based information related to empowering companies to get on their feet so they can compete effectively under pure market-based fundamentals.

For example, if an enterprise qualifies as a broad-based black economic empowerment (B-BBEE) small to medium enterprise – that is, a black-owned company with a turnover of between R500 000 and R20 million a year – it can qualify for developmental assistance from the bank.

“That assistance can include favourable payment terms, potential placement on an enterprise development programme and introductions to potential partners to enhance joint ventures or B-BBEE structured companies through supplier development forums,” Standard Bank said.

The bank added that it supports existing black-owned SMEs by considering favourable payment arrangements such as advance payment. “For example, an SME being given a portion of payment in advance so they may deliver more efficiently. These are considered on a case-by-case basis,” the bank said.

In an era where concepts such as creative capitalism are being popularised, it is clear that meeting social objectives such as development and inclusiveness, while using market economic dynamics, is crucial. In an era when markets have survived the century’s biggest debates between capitalism and socialism, using the former to achieve often noble goals espoused by the latter appear to be the new mainstream.

With Africa both the most underdeveloped region of the world and the one with the greatest economic potential, our homegrown banks and 'thought leaders' will have a larger place in the world’s global debates based on the most enduring issues of poverty, wealth, development and justice.

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