Tuesday, August 04, 2009

SA Banks see the small business market as key

I was pleasantly surprised to see the article on the PRMinds website this morning, commenting on a recent report from on the South African banking sector analysis. Where entrepreneurs and small businesses has had to play second fiddle for years in the past due to the perceived higher risk, the recent economic slow down has really turned the tables and we now find that small firms may become the preferred market. Small business need start-up and growth funding and together with business investors, the banks play a key role here

The report states that 'We believe that the future of the South African banking sector lies in personal banking and the small and medium-sized business loans. The banks, in particular, should focus more on expansion of their operations in the domestic economy in coming years. In view of boom in Internet accessibility and mobile phone penetration, telephone and Internet banking has emerged as another key area for growth.' This will be great news for thousands of entrepreneurs and small business owners.

The report went further to say that 'The banks in the country continue lending despite economic slowdown in the world. The bank loans and advances grew at a CAGR of about 17.8% during 2002-2008. The demand for credit by the corporate sector picked up considerably in an attempt to expand production capacity and increase inventories to meet the growing household demand. Moreover, the demand for credit by the corporate sector has also been picking up in the recent years—despite the growing use by companies of non-bank sources of credit such as corporate bonds and commercial paper—driven by fixed investment and infrastructure spending.

This shows that there are still plenty of cash available for the small business sector, and a signal of intent by the banks to back the economy by boosting small business.

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