The COVID-19 Business Info Hub spoke to Stephen Segujja, Head of Enterprise Banking at Stanbic Bank Uganda to understand how the bank is meeting customer needs in this time of crisis.

We will be there for you as a bank. We have supported you when things were going well, and we will support you in this difficult time to get back on your feet

Highlights

How has the SME sector been affected by COVID-19?

First, about 4,900 companies were actually completely closed. We are talking about 80 to 90% of SMEs. Second, from a lending perspective, we have seen lending to SMEs drop by over 75%. Third, looking at transactions, the number of transactions has dropped drastically by almost 60 to 70%. This all speaks to the impact that COVID-19 has had on the sector.

How is Stanbic Bank supporting its SME customers during this time of crisis?

Stanbic Bank has developed a number of interventions including:

  • Debt relief for up to 12 months, depending on the sector
  • POS machines to facilitate cashless transactions
  • Access to purchase goods from China through a super-agent to avoid the need for travel
  • Financing remains available for businesses still operating in the supply chain
  • Enterprise Online platform to facilitate payments

How can businesses get in touch with Stanbic Bank?

To restructure an existing loan, call your Relationship Manager or Business Banker, or connect with us at 0312226600 or via email at enterprisedirectug@stanbic.com. We also have our social media platforms open open – Twitter  (https://twitter.com/StanbicUG), Facebook (https://www.facebook.com/StanbicUg) and blog (https://blog.standardbank.com/uganda) and  website www.stanbicbankuganda.com. We can also be reached 24 hours a day at our toll-free line: 0800250250. Most branches remain open and are operating from 9am to 3pm, Monday through Saturday.

Interview with Stephen Stephen Segujja, Head Enterprise Banking

Q: Can you please introduce yourself?

My name is Stephen Segujja and I am the Head of Enterprise Banking, where the SMEs and local businesses sit, at Stanbic Bank.

Q: Can you tell us about the SME sector in Uganda?

The SME sector in Uganda is basically clients who are involved in the day to day running of businesses, local businesses in and around the country. They cut across various sectors. The sectors are oil & gas, manufacturing, trade and commerce, educational sector, the NGOs, and also people involved in infrastructure. Also, not forgetting clients in agriculture and agribusiness. SME stands for small and medium enterprises. What we mean by small is those enterprises who are mainly beginning businesses. They have left the startup stage but are in business between six months and about two years. These are businesses where they have invested some capital between 100,000 to about 3 million shillings. Looking at the people they employ, these enterprises employ between 1 and 5 people. They are small in nature but have potential for growth. What we mean by medium enterprises, they have invested quite a lot of capital in their businesses, from about 3 million all the way up to 500 or 600 million shillings. Looking at how many people they employ, it is between 5 to 15-20 people. We have those that have left the medium stage, which we look after as well. They have usually invested between 1 billion shillings up to 3 or 4 billion shillings. They now employ between 50 – 100 or 150 staff in their businesses.

Q: What challenges are SME clients facing during the COVID 19 crisis?

Looking at COVID and the times we are in, I don’t think there is a segment that has been as hard hit as the SMEs. The reason I say that is that SMEs are involved in value chains, so even when you find a startup, you find that these are businesses that are usually at the end of the value chain or involved in distribution or small manufacturing. The reason why COVID has hit these people the most is because when we talk about disruptions in these value chains, the suppliers are already affected, these supply chains have been cut off much earlier. They were not able to import raw materials in time. The second one is from a local perspective, when we talk about lockdown, you find that because of social distancing, these larger companies have closed down and are not able to supply SMEs. Because of no movement of people, although there is movement or cargo, you find that cargo has not been able to be supplied to the businesses, who then cannot supply it to the final person. So that is in part where the challenges are. Second, looking at the value chain, you can also look at cashflows coming in. There are no buyers at this time, so businesses do not have cashflows immediately. They cannot pay their staff, they cannot pay their suppliers. They have not been able to have the cashflow to purchase and to then supply the final person. This is why the SMEs find themselves in the heat of this pandemic.

Q: Can you give us a quick snapshot?

Looking at the number of companies that actually closed, about 4,900 companies were actually completely closed. We have about 280 companies operating now. We are talking about almost 80-90% of these SMEs actually closed. The second is access to the markets; even from a lending perspective, we’ve seen lending to SMEs drop by over 75%. Third, looking at the number of transactions these SMEs are doing, you find the number of transactions has dropped drastically by almost 60-70%. This all speaks to the impact that this has had on the sector.

Q: What initiatives is SBU undertaking to support SMEs at this time? Please be as specific as possible on what the bank is planning to do by sector.

It is times like these that your financial partner comes in strong to support you. Our clients, our SMEs in this economy, this is when they need us most. There are many things we have done to support demand:

  1. With support of the central bank, we have been able to provide debt relief to our customers. They have allowed us up to 12 months. This 12 months is depending upon the sector because the sectors have been hit differently. It could be a sector like tourism, which will be hit harder for much longer, or it could be a sector like health, which has not been hit as hard. So we have provided moratoriums to support our customers until they are back on their feet.
  2. Because of social distancing, we are supporting our clients that are still operating by helping them to collect their money. To protect the clients and their customers, we have put together Point of Sale (POS) machines, so the clients do not need to go with cash and touch and give out cash. They can go with a card and purchase goods without cash exchanging hands (given the risk of cash transmitting COVID-19).
  3. A third is a solution around FlexiPay. We allow our clients to be able to go to any of our clients to be able to pay.
  4. We also have many agents spread across the country. If a client cannot come to a branch, they can go to an agent to transact.
  5. Another is around clients that are still importing. Cargo has been allowed to continue to come in. Our clients used to travel to China, India, or Dubai. 90% of our goods, especially in trade and commerce, are from China. We have a super-agent in China – Zhejiang International Trading Supply Chain Co Ltd, also known as Guomao that can receive orders without the client actually traveling to China to purchase goods. The goods are put on a ship and sent to Mombasa and then come to Kampala.
  6. Lastly, the economy has not yet closed, and there are some opportunities we have seen in priority sectors, those around health, construction, agriculture. We have our doors open for clients in those sectors that need financing. We continue providing financing to those clients. In the education sector, we have allowed some of the schools to come and access financing to be able to pay teachers.
  7. In regard to our clients who are still in the supply chain, we are providing bridge financing based on invoices so businesses can continue operating. Once receivables come in, they can pay off those loans. We are providing invoice discounting and contract financing around this time. Some clients need small overdrafts to continue running their businesses, paying their workers, running their factories, paying utilities. We are still supporting those clients needing overdrafts around this time. We can provide that within 48 hours.
  8. In terms of enabling our clients to pay their workers, their utilities, all the payments that they have, we have provided a platform called Enterprise Online where they can actually access that payment using the platform.

Q: If an SME needs to refinance an existing loan with SBU, what steps should they take? What other coping solutions are available?

If a client has a running loan with us, the first thing that we have done following support we received from the central bank, we have asked clients to contact their Relationship Manager (RM) or Business Banker (BB) or the branch closest to them to apply for this debt relief. It is important customers actually apply and tell us how many months they need this debt relief. We will do the assessment and come back to the client. We do an assessment and then give you a letter of consent with new terms and conditions and schedule payments to a later stage. If you can’t contact your RM or BB, there are numbers you can call to access someone from the bank who can help at: 0312226600 or we have an email address: enterprisedirectug@stanbic.com. We have also been very proactive. We have called up as many of our customers as we can to get updates, understand what they need, what support we can provide.

Q: How should customers engage with the bank (Call Center, Facebook, Twitter, SMS, etc.)? Have there been changes to branch opening, operating hours, staff availability, etc.?

We have our social media platforms open – Twitter  (https://twitter.com/StanbicUG), Facebook (https://www.facebook.com/StanbicUg) and blog (https://blog.standardbank.com/uganda). You can also contact us via website at www.stanbicbankuganda.com. We have adjusted our opening times in line with the government directive. We have shortened our time from 9am – 3pm, Monday to Saturday. Most of our branches are open. You can also contact us at our toll-free line, 24 hours: 0800250250.

Q: What can business owners do now to prepare for a new post COVID business environment?

I always tell people that situations come to allow you to rethink about your business. This is a time when I encourage business owners first of all not to panic. COVID has come but also COVID will go. One of the things is that our SMEs and businesses need to do is look at where they can create more efficiencies within their businesses, digitize within their businesses. Delivery has become the new norm with social distancing. These are things businesses will get used to. Embrace digital – it is very critical at this time. The second thing is around how to expand markets beyond here. Some opportunities have developed out of this. How do you look beyond operating just [in Uganda]? A final thing is to analyze, look at where you are sourcing from, and ask how you can use some of the tools that the bank has created to source goods.

We have a Business Incubator, where we offer non-financial services, support. I encourage our clients to [join the incubator]. It is free of charge. Come and register with us. Here we can discuss how to support you during this time. WE will be there for you as a bank, even in the hard times. We have supported you when things were going well, and we are happy to support you in this difficult time to get back on your feet.