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UT Financial Services fast tracks SME funding in South Africa

2013-06-30 18:45:00

UT Financial Services South Africa (UTFS SA) has launched a new range of services for small-to-medium enterprises (SME) that cut finance approval to 48 hours.

Specifically designed for entrepreneurs and SMEs, the new services differ from those of traditional banks by giving SMEs faster access to capital based on a carefully managed partnership approach.

UTFS SA is a registered financial services provider, founded in 2011 as a joint venture between UT Holdings Ltd of Ghana and FABCOS.

Prince Kofi Amoabeng, Chief Executive Officer of the UT Group, says traditional banks hesitate when issuing loans to SMEs because of the perceived risk factor, which means loan approvals can drag out for months, the final loan amounts don’t always meet the business’s requirements, and the repayment terms often prove detrimental.

“Our approach is different in that we take time to understand the business, its dynamics, its market conditions, and only then make a decision on how we can best be of service to the business,” says Amoabeng.

“Given our extensive experience in Pan-African banking and our singular focus on the SME market, a decision is taken within 48 hours on whether or not we will offer our support. It also means we don’t hold the business to inflexible repayment terms, and wherever possible, we work with the business’s financial cycles to structure the loan.

“For example, if the business deals with Government tenders that pay in 60-day cycles, then we synchronise loan repayments with those cycles. Likewise businesses that get paid weekly can opt for weekly repayments.”

According to South African Minister of Finance Pravin Gordhan, SMEs create a disproportionate amount – up to 80 per cent – of new jobs in the country.

In a speech to the South African Chamber of Commerce and Industry in October last year, the Minister noted that: “about 70 per cent of private employment [in South Africa] is in firms with fewer than 50 workers [and] addressing the employment challenge facing our country will be difficult without a sustained upward shift in the number of firms operating in the country and the expansion of jobs created in smaller firms.”

In separate research published by the International Finance Corporation (IFC) and McKinsey & Company, “there is a US$140 billion to $170 billion financing gap for SMEs on the African continent.” In addition, “bank financing to SMEs in Africa has remained less significant and more short term in nature compared to other emerging nations. Generally, in other emerging nations, bank loans devoted to financing small firms average about 13 per cent, while around five per cent of loans are allocated to such firms by banks in Africa.”

Amoabeng says that a large percentage SMEs rely on private finance, in the absence of which they find it exceedingly difficult to trade.

“The significant shortfall in finance and other banking services available to SMEs in South Africa poses a serious risk to the economic growth and development of the country,” he says. “If ever there was a time when a more direct, considered and sustained approach to SME finance was needed, it’s now.”


by UT Financial Services South Africa

Published: June 13th, 2013 (

Posted in : Banking & Finance Comments : 0

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