Cheaper Cross-Border Payments for SMEs

Small and Medium Enterprises (SMEs) are positively significant drivers of economic growth in Sub-Saharan Africa. Official estimates indicate that the sector accounts for up to 90 per cent of all commercial enterprises in these economies.

These businesses include food processors, distributors, Agribusiness, education providers, manufacturers, wholesalers, retailers, transport and logistics, importers and exporters, among many others. The continent relies on the sector to provide indispensable jobs and services to its copious unemployed youth and the entire population.

Its role in job generation is pretty meaningful, looking at the fact that in many African nations, the sector employs close to 90 per cent of the masses. Quite a sizeable percentage of the service industry depends on it for functionality and delivery.

Without the sector, many African families will go to bed on an empty stomach and can’t even educate their children. Needless to say, many African economies will lose a significant portion of their GDP if such businesses were not around.

The influence of SMEs on African economies over the decades is substantially colossal. However, the potential is gigantic, and if properly harness with the right regulatory framework, tools and technology, the impact would transform the continent to an economic powerhouse it desires earnestly.

Bottlenecks To African SMEs

Despite the critical contribution from the sector, it faces uncountable challenges that are, in fact, an obstruction to realizing its full potential and creating appreciable prosperity for the hard-working people of Africa. If the stakeholders give enough attention to eliminating those factors, it would unleash an enormous wealth for all, especially the growing youth population whose hands are waiting to work for the betterment of their lives.

According to the International Finance Corporation, Africa’s finance gap for SMEs stands at $331 billion. Though the industry provides 38 per cent of sub-Saharan Africa’s GDP, yet 51 per cent of the continent’s 44 million approved SMEs lack the finance needed to expand to its fullest.

Besides underfunding, the business environment is not conducive to propel the necessary growth craved by the SME community. The regulatory environment must support entrepreneurship to be easy for job creation.

The obligation to concentrate on streamlining regulatory bottlenecks such as licensing, incorporation and taxation is imperative for success in the short to long-term basis. Lower entry into business should be a top priority for African nations since these burdensome factors drive many enterprises into the informal sector.

Cross-Border Payments

There again, SMEs find it very challenging to engage in cross border trading for quite some reasons. One of the most debilitating factors inhibiting profitability and access to markets is the lack of cheaper, faster and efficient cross-border payment systems for African SMEs with pleasant user experience.

For instance, it takes an average of three to five days to send funds from Ghana to neighbouring Nigeria through some banks, which is unsustainable in an era of globalization. More compounding, it cost more than 13 per cent proportionally to do that.

Not forgetting the pernicious exchange rate margins of 8.32 per cent, which are also another form of increasing the cost of moving funds for business outfits, and more complicated for the already struggling small scale and medium companies. When businesses have to go through such complicated procedures of paying suppliers and partners, it eats away their profits, increasing the cost of doing business, consequently restraining innovations and good service delivery at the detriment of all stakeholders.

To bring an African renaissance and usher in a new era of a golden age of business for our SMEs to reach its full potential, we must change the status quo. But the reality is that new tech can help small entities import/export and pay for goods and services expeditious and cheaper.

Our Role At DEMARS

At DEMARS, we are building cross-border payments infrastructure on the Stellar Network, which local institutions can quickly and cheaply plug into. Enabling them to reverse the narrative – by allowing SME’s without access to large banks and their expensive products the ability to quickly and cheaply pay their suppliers abroad. These are tools that can spur the growth of SMEs by saving them time and money when it comes to moving funds to facilitate cross-border exchanges.

Our dedication is to offer the quintessential technical foundation to organizations to run a remittance service in the slightest possible time, saving the latter months of development cost and time. Accordingly, it is remarkably lenient for institutions to launch their own remittance services.

The partnerships DEMARS is building across the continent with existing regional, community-focused financial institutions like Micro-Finance, Cooperative Banks, Credit Unions, Savings Clubs, and all deposit receiving financial institutions, provide tools and products to grow their financial services businesses. These are tools that can promote the activities of Africa’s SMEs communities and eradicate one of their toughest impediments.

Our technology is at no cost to implement to empower financial institutions to connect to next-generation cross-border payment anchors. The age of exposing African Small and medium enterprises to excessive fees for inherent financial services and denying them low-cost savings and investments are coming to an abrupt end.

DEMARS is bringing unprecedented prosperity to our beautiful continent with quicker and extremely affordable contactless mobile payment services. The future is here with us today, thanks to permissionless ledger technology.

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