February 2020 - Gabriel Davel

AND: Credit contraction in adverse Access to finance economic conditions a major obstacles to for SMEs SME survival & growth 3 Banks generally accept SMEs as SMEs finance: Challenges important & profitable client base, with high potential for growth contract enforcement & collateral recovery swings in the business cycle / sector However, significant challenges in impact / contraction financing the. [...] capital and provisions 4 banking monopoly & growth of fintech] (Basel II / III + IFRS 9) 5 1,946 bn 2,057 bn 228 bn 418 bn Decline in SME sector & labour absorption (62% of private sector employment in 2000 to 55% in 2015). [...] Very small compared to other credit segments ― jobs lost: 1 mil + ― losses in GDP, export & tax Extreme constraints on bank credit to SME sector since 2008. [...] As % of business credit, both SME Retail and SME Corporate well below comparative levels in OECD and most middle income countries Contraction in bank credit not only constraint to SME growth, but significant contributor. [...] 22 Option for SME Targeting Offer guarantees directly to SMEs, through fintech application Avoid banks playing “gate keepers”, improve competitive engagement Include all SMEs in scope, with price incentive for BEE [adverse selection & moral hazard … SME vs bank, which is greater??] Separate (new) company, independently managed & dedicated to managing credit insurance Two options: (a) Ent.