KBA CEO CHAT - Supporting SMEs Affected by the COVID-19 Disruption

CEO | Jeremy Awori, ABSA Bank, CEO
MONTH | May 2020
David Indeje
Good morning everyone
David Okello
In a bid to modify Kenya’s public healthcare system towards achieving Universal Health Coverage, my organization (Elixir Medical Group Limited) is investing in affordable low-cost housing among other programs, a project we want to administer in partnership with local banks on mutual basis. I would like to know if ABSA is open to such arrangements and who should I contact. I invited one of your members from Kisumu branch to a meeting to discuss and explain this but they didn’t show up.
David Okello
Good morning
Tony Lwich
Morning
Oscar Magu
Goodmorning
maina NJUGUNA
Good morning Mr. Jeremy Awori. For starters, kindly define what you at ABSA Kenya consider to be an SME.
David Indeje
Q1: Last week KBA released a survey which said only 28 percent of local banks are willing to take up new risks, while 72 percent are unwilling, pointing to low absorption of credit. So what will make such banks to take up new risks by offering a lending hand to the SMEs?
Chat Admin
Good Morning everyone and welcome to the chat!
Fredrick Juma
Himuselefu has landed. Hope to have a great learning experience just like last week. Subject on SME is a great one today. Good job
Chat Admin
We are pleased you could join the session. Thank you for making the time and for logging in early!
WINNIE KIRATU
Goo morning, looking forward to the session
David Indeje
It is commendable in what the banking sector is doing by restructuring loans, waive fees for certain transactions. However, is the sector ok with the regulators' policy responses to the same?
Chat Admin
Today we will be covering the topic Supporting SMEs Affected by the COVID-19 Disruption and our host is Mr. Jeremy Awori, ABSA Bank, CEO
Tony Lwich
Good morning Sir,how have you assisted the informal sme's in kenya like mama mbongas during this COVID-19?I'm an informal business owner as well but personally i have not encountered any informal sme being supported .Will be humbled if i get a one on one session with you even for a few minutes.Thank you
Chat Admin
We look forward to your participation and questions on this topic. I'm sure we all have unique experiences and things we would wish to have the host and the chat community's thoughts on
Oscar Magu
- Good morning Jeremy, at a time when banks seem to be breaking their backs to cushion customers and small businesses. Is Profitability and resilience still a priority? Is there a risk that this crisis will eventually turn from a health crisis to banking crisis?
nuru mugambi
Hi good morning
Chat Admin
I see a couple of people have already started posting and it's a great thing. Please keep the questions and thoughts on today's subject coming and our host will take us through them as soon as he joins the chat afew minutes from now
WINNIE KIRATU
How are Banks treating sectors that are adversely affected?- SMEs that have closed down such that loan repayments are expected to be very low/zero? Keeping in mind Banks also need to get those monthly repayments for profitability
Austeen Onyango
Good morning Jeremy?What has helped you get to where you are and what advice would you have for others who want to set off in a similar direction?
Chat Admin
Good morning Nuru, Winnie, Monica..Thank you for joining the chat! I also see Fredrick, Oscar, Alfred, Tony, Austeen, Maina and Limo! Couldn't be happier to have you in the chat today!!
ALFRED SAMARERE
Good morning sir
Chat Admin
Asken, Donald, Ruth, Serah, Joash, Louiza, Lewis. Karibuni to the chat
Monica Chege
Good morning, outside banking what are your thought on IMFs request for govt to reverse the tax cuts?
ALLAN KIVUVA
Good morning Mr Jeremy, What measures is the banking industry in general taking to ensure job security for its employees, considering the closing of bank branches across the network?
Joash Masese
The government has introduced a series of stimulus measures, including reduction of value added tax and corporation tax though this is not enough. What in your view should banks do to lessen the effect of the pandemic on SMEs?
LEWIS MWANGI
Good morning. How can the derivatives market be used to cushion SMEs from the pandemic?
Chat Admin
Our host is now here and ready for take off. Ladies and gentlemen, please welcome Mr. Jeremy Awori, ABSA Bank, CEO
Roy Xuzhi
Good Morning Mr Jeremy
ALFRED SAMARERE
I have a 2 questions on the credit/debt reorganization and general operations.How is your bank managing it now that almost every business needs a boost including those loyal clients in sectors that are unlikely to recover any time soon?.Does the pandemia affect digitalization of financial services provision to the smes ? If yes to what extent and how are you planning to manage it?
Joash Masese
Welcome Jeremy
LEWIS MWANGI
Welcome Jeremy
Fredrick Juma
Welcome Jeremy.
Muhammad Nyamwanda
Good morning Jeremy, just a quick one is it possible for banks to consider paying for training of their SMEs clients on adopting new media and utilizing it for growth during this tough period.
David Okello
Welcome sir
Tony Lwich
Welcome Sir
Jeremy Awori
Good morning everyone welcome to this CEO Chat session. Im happy to be here and look forward to having this conversation and to discussing issues with regards to SMEs and how they are coping in this difficult COVID environment.
ASKEN AGWARO
There is pressure on banks to step up and help jumpstart the economy during this period, especially by helping increase liquidity and money circulation.
DAVID KAGEENU
Good morning everyone, Glad to be here...
Ruth Maonga
Good morning everyone
JohnPaul Lukorito
as a compliment banks have extended various reliefs to customers,hese includes provision of short-term loan holidays for customers whose businesses have been affected, extension of loan tenures, and facilitating timely payments, waived transaction fees and enhanced services offered on online and mobile banking platforms and ABSA on the lead,its a first plus for customers.How assured are banks focused on their performance given that the core business generating incomes are halted for sometime.2.We have seen in The NSE bank stock prices declining very fast,infact all banks,yesterday Kapchorua Tea,Umeme,Uchumi,Stanlip gaining heavily but all banks dropping,how cushioned are the shareholders?
Jeremy Awori
By form of intro, we are all aware of COVID-19 and I we are in an environment which is constantly changing and challenging all forms of business, not just in Kenya but across the region and the world. We are very aware that SMEs and MSMEs have been really affected by this pandemic. And also by the impact on supply chains and trade flows. Not to mention the impact of lock down on day to day operations. As an industry, we are obviously trying to do our best to work with customers to try and help them through this crisis as best we can.
ASKEN AGWARO
There is pressure on banks to step up and help jumpstart the economy during this period, especially by helping increase liquidity and money circulation. Are banks ready to cope with the possibility of inflation if they happen to succumb to this pressure?
Wangeci Wachira
Hi Jeremy, welcome. Good morning all. Question: There's always been some hesitation to lend to SMEs even before COVID 19, how will it change in this era, if at all?
Jeremy Awori
Im glad to see we have lots of people joining
Jeremy Awori
Thank you so much
Fredrick Juma
How are Kenyan banks supporting SMEs during this difficult time apart from restructuring the loans?
Jeremy Awori
there are a lot of really good questions which we are going to try and work through
Stephen Migai
Good morning Bwana CEO
Jeremy Awori
To get started, we can start with Mainas question on definition on SME
emmanuel bensons
Good morning all
Jeremy Awori
Within Absa we bank the full range of SMEs from Micro businesses with relatively small turnovers (no minimum) to businesses with turnovers up to 500 million.
Roy Xuzhi
including family business?
Stephen Migai
Covid-19 period is unique to the Banking Sector. How are banks prepared to weed out unscrupulous MSEs who're out to take advantage of the graces given by Banks during this period? For instance, in loan repayment restructuring, will moratoria be offered to non-performing loans?
Jeremy Awori
The industry definitions do vary but include number of staff and turnover. The definition is not really the issue, the more important thing is are we getting banking to entrepreneurs, whether you are a startup or established for many years. The industry is committed to providing and improving banking services for SMEs now and in the future.
emmanuel bensons
i have realised that most financial institutions have stopped giving out loans.now how do we go about this during this tough times .especially for me i just registerd my business 6 months ago and its doing well ,unfortunately most of my clients are paying after 45 days yet i didnt have enough capital
Nicholas Nzioka
Would a risk mitigation instrument be of relevance for banks in order to increase exposure to the SME segment or is liquidity more important at this time when repayments by SMEs will have to be deferred?
Jeremy Awori
Welcome David Indeje, I see your question about banks taking on new SME risk. We recognize this is a difficult environment for SMEs and as a sector we have tried to help by taking the following measures...we have waived fees to transfer money from bank accounts to mobile wallets; this is important because it makes it easier for online transactions to happen and removes costs for the customer, it also aligns with the COVID hygiene requirements. Online payments also increase convenience so customers can bank wherever they are. The other thing banks have done is introducing payment holidays for SMEs, as well as, restructuring loan facilities to help businesses through this crisis. So far 81.7 billion shillings worth of loans have been restructured by banks.
Wangeci Wachira
The question by Nicholas Nzioka ...I have the same question and also along those lines, what else is ABSA looking to invest ( e.g. tech, data, etc) in to support such goals, especially in this era?
David Indeje
Thanks Jeremy for the response. It is good that we have payment holidays for the SMEs
Brian Maiko
There are many cases of default repayment of loans some as a result of the business situation. For those doing business with government, we understand that it takes too long for them to be paid for the services and goods they supply. Is there any way you are aligning their plight with the kind of facilities you are offering?
Jeremy Awori
Banks current focus has been to support the existing borrowers as already indicated, and banks are looking at sectors where they can lend for example there are many businesses that have changed their business models. We are also supporting businesses that are producing goods and services that are related to COVID such as manufacturing of masks, sanitizers and other health products. I think banks will still assess SME applications on a case by case basis so I encourage business owners to talk to their banks...there is no lock down on lending, banks are ensuring they lend responsibly as we have a duty of care to the customer, not to get them over indebted, and also to our depositors and shareholders who have entrusted us with their funds.
Roy Xuzhi
As Wangeci Wachira mentioned, if there's some new tech/data, is ABSA going to do the R&D yourself, or close-cooperate with other technical partner?
lucy kagia
Good job Absa on all the measures you have taken to help SMEs, paymemt holidays, webinars, waived fees. Good job!
Julius Njoroge
Banks have done well in assisting the economy during this time. as an addition, would banks consider offering cashflow insurance to SMEs through their bancassurance? this is to caution against pandemics as this one
Jeremy Awori
Welcome Tony, I see your question about informal sector. Banks are supporting customers in the informal sector although it might not always be apparent because they have partnered with mobile network operators; banks are also offering mobile unsecured facilities. Banks are also working with various corporates to support their supply chain. And each bank has their own offering with a number of banks catering specific products to support this more informal segment. I would speak to your bank to find out more of what they have that might suit you.
Winnie Kiratu
Aside from existing facilities extended to SMEs, what's the appetite for lending to SMEs right now in the COVID era?
Jeremy Awori
Hi Oscar, I see your question about profitability and a possible banking crisis...
Tony Lwich
Thank you sir
Josephat Wabwire
I have seen your advert about your intentions to fund taechers from private schools which measure have you put in place because this sector has high staff turn overs
Thomas Musyoka
whats the take on smes who are giving out unsecured loans,the customers markets where they operate their businesses were closed,thus the SMEs were extremely affected by high default,how do you assist this SMEs
Jeremy Awori
Banks have to balance being there for their customers, playing their intermediary role in the economy, and addressing the requirements of their shareholders and depositors whose money has been entrusted to us. It is critical that banks remain strong, stable and healthy and are well capitalized and liquid. Profitability and health of the business is essential for the sustainability of the firm beyond this crisis. And decisions have to be taken in that context. Banks in Kenya are well capitalized and liquid. If well managed, there is no reason to think this is going to become a banking crisis. We are well placed and working with the regulator to ensure the health of the sector; and also to support customers and the economy.
STEPHEN KIPROTICH
Banks and by extension the Government has classified food vendors(supermarkets,grain traders,etc) as essential services and are willing to lend to them in this covid--19 era.However most banks are unwilling to lend to the primary producer .i.e. the farmer.What is your bank doing to correct this anomally since you cant have a vendor without a producer.
Oscar Magu
Thank you Jeremy.
Fredrick Juma
Hey Jeremy. Absa Bank rolled out a good step in paying SME suppliers within 7 and 14 days upon delivery of the work. Has this already started? And does it only apply to SMEs who supply to you directly or even those who do through the agencies?
Jeremy Awori
Welcome Winnie, banks are supporting their customers who have been adversely affected...banks are helping with information and training on how to survive the crisis; we are also restructuring facilities to ease their cash flow positions by giving repayment holidays, extending tenors, among other interventions; in certain instances, for example in the hospitality industry, we have restructured the facilities for when they reopen.
Nathan Rotich
GreenMax and Energy 4 Impact (UK NGO) with the support of a few impact funds are launching a First-Loss Guarantee Facility to increase energy access lending. We've been trying really hard to get access to anyone at Absa. The fund would guarantee 5 to 20% of the First-Losses. Would this be something of interest (nrotich@greenmaxcap.com)
Jeremy Awori
Good morning Allan, thank you for your question about bank employees and layoffs.
Jeremy Awori
Banks are doing everything they can to manage their costs and in particular the non-staff costs to ensure that our people remain employed. In addition, banks are coming up with new business models to allow employees to work remotely, from home, and other locations to continue offering services to our customers through this pandemic and beyond. We are also investing in upskilling our employees.
Jeremy Awori
Hi Joash, I would commend the government for moving swiftly to respond to the crisis. These actions that they have taken will definitely help the cash flow of individuals and businesses; policymakers are continuing to look for additional measures that can be taken as the situation evolves to help the economy withstand the crisis. Additional measures that could be considered could include deferral of certain taxes and license fees (both at county and national level); deferral of NHIF and NSSF; payment of outstanding bills at county and national level; and VAT refunds to businesses to alleviate the cashflow challenge. Banks can also work with the government and other partners on risk sharing and guarantee schemes to fund SMEs.
Ted Opiyo
Good Morning, I'm a CEO of a startup and during this time it has become more apparent to invest more into the business to accelerate growth and beat our competition who are operating inefficient business models. I have raised capital in the form of land and apartment buildings. How can a business leverage their real estate to turn around cash in a sustainable way to sustain SG&A and supply chain costs?
Njoki Ndungu
Thank you for the engaging chat Jeremy. This is a great initiative to cushion SMEs in this Covid-19 era.
Jeremy Awori
Monica, the IMF and Government need to discuss this and the pros and cons of the different policy options as reversing some of the measures already taken could have implications on businesses cashflow and household income in the short run; the key focus is to keep as many businesses open and as many people employed as possible.
Jeremy Awori
Lewis, you raise an interesting point about the derivatives market. Derivatives are typically used to manage risk in transactions; and to price these risks there needs to be a more consistent view of the future. This pandemic has created an environment which is very difficult to predict what will happen next week let alone next month; so it is difficult to price derivatives for our market given the difficult and ambiguous situation.
LEWIS MWANGI
Thank you sir
Jeremy Awori
Hi Alfred, I think ive answered the first part of your question on how banks are cushioning customers...to the second part of your question about digitization...the pandemic has necessitated new ways of working and the adoption of digital and automated ways of doing business.There are huge opportunities for SMEs to run their businesses in a digital environment, including the interface with their banks. You can expect to see more products and services being deployed on digital platforms. And also more self-service and self-fulfillment platforms becoming available. This will enhance convenience for the customer and also efficiencies for both parties.
Jeremy Awori
Welcome Muhammad, indeed, absolutely...Absa has a program you can look into for this support and training. Reach out to us on social media channels or call our contact center for more information.
Jeremy Awori
JohnPaul thank you for your question about the capital markets; banks are a critical pillar in the economy but we need to remember that they are businesses as well that have a duty of care to their customers, depositors and shareholders. Management on boards have to make sure they take the right decisions to ensure they manage risk while maintaining business performance.
ALFRED SAMARERE
Thank you
Eric Musau
What is your sense about having Open Banking as way of enhancing inclusivity & customer choice? It would also allow developers a chance to enhance their fintec offerings.
JohnPaul Lukorito
Thanks
Jeremy Awori
Wangechi, thanks welcome, banks have changed the way they view SMEs; in fact banks in Kenya lead on the continent in regards to the proportion of their portfolio that is allocated to SME lending. We expect banks to continue as SMEs are the engine of the economy. What will continue to evolve is the way banks assess risk, especially in the new environment. Banks will collect and use more data to improve their loan approval processes.
Roy Xuzhi
Yes, the big data analysis system for banks to control NPLs is do important.
Jeremy Awori
Emmanuel, welcome to this discussion, allow me to first congratulate you on taking the step to start your own business! These are indeed very difficult times. I would encourage you to speak to your bank where you have a business account, and they may be able to help you through this period; you could consider talking to your banker about invoice discounting to get cashflow into your business in the interim.
solomon kinyua
How can i get a working capital,i own 2 bodabodas and i want to add a tuktuk and a nissan please assist
Wangeci Wachira
Thanks Jeremy, noted...TransUnion is a great partner in helping you leverage the required data :-)
Jeremy Awori
Hi Brian with regards to government payments, we are actively working with government to try and release payments as soon as possible to help businesses and are also exploring some form of invoice discounting as well.
Chat Admin
Team, we are over time and will need to be wrapping up the session soon but we'll try to answer as many questions as possible before we close
Jared Osoro
Great conversation Jeremy; very enganging.
David Gitonga
What is your position on cryptocurrencies? Where do you see Absa positioning itself in this dynamic space as talk on cryptocurrencies and stablecoins continues to gain ground? We don't see any banks in Kenya positioning themselves in this space?
Patricia Gathuri
Great conversations here. Thank you ABSA MD and KBA.
Jeremy Awori
Josephat, we work with schools to assess how we can help them cope with this crisis. Typically, Absa is helping them adapt to running their businesses online and the investments required for that. Also, we are helping with different kinds of facilities and restructuring to help them balance their cashflows as we wait for them to reopen.
David Okello
Quite engaging. Although I didn't get a direct response to my question, I indeed learnt a lot from you. Thank you sir
Jeremy Awori
Stephen, we have an agribusiness unit which looks at both primary producers and processors.
Jeremy Awori
Fredrick, Absa is paying our own suppliers (suppliers to the bank) within the 7 to 14 days. If you are working through an agency that has supplied Absa, please pick it up with the agency.
Jeremy Awori
I see we have questions that I wish we could have had time to respond to, but unfortunately we are out of time. Allow me to wrap up.
Jeremy Awori
I do appreciate these are very difficult times. And banks are doing our best to support businesses through this crisis. And I urge you to talk to your bank should you require help; or should you be in difficulty with any repayments as they may be able to come up with some solutions to help you through this period.
Jeremy Awori
The COVID-19 pandemic has changed the way we we do businesses in the future. And I suggest you think about how you will run your businesses in the new digital environment going forward.
Wangeci Wachira
Thank you for creating the time Jeremy and KBA...and even running over :-)
Lilian Ongode
Thank you for the great session
Prince Muraguri
Many thanks for the insightful session.
Jeremy Awori
If there are questions related to Absa please message us on social media (facebook or twitter); email absa.kenya@ absa.africa; call our contact center at 0722130120 or visit a branch.
Jeremy Awori
Finally, difficult as this environment is, even this too shall come to pass. We need to work together to try and solve the immediate challenges as we encounter them. Its times as this that I am proud to be a Kenyan because we are a passionate and resilient people, and we will always find ways to win and overcome difficult situations...thank you again for all the questions and comments. Stay safe and God bless you and your loved ones.
Beth Mutungwa
it was a great session.
Chat Admin
Ladies and gentlemen, thank you so much for your participation and your insights. Most of all we thank Mr. Jeremy Awori for taking the time and for his insights on today's topic
maina NJUGUNA
Thank you for this very informative session. Looking forward to the next one.
Chat Admin
For those who joined late, please note you can find a transcript of today's chat on the website even after we close the chat room.
Chat Admin
We look forward to meeting you here again next week, same time as we go over the final chat session in this edition. The topic for next week's chat is Financial Strategies for Households and our host will be Charles Mudiwa, Stanbic Bank, MD
Chat Admin
*Mr. Charles Mudiwa, Stanbic Bank, MD
Chat Admin
Thank you everyone and have a fantastic day and weekend ahead!