Economic Development

Special Feature Story

The SME market constitutes a large segment of the economy. In fact, SMEs represent over 90% of Lebanese enterprises in Lebanon, which makes this market large by all definitions and estimates.

According to the International Finance Corporation (IFC), a member of the World Bank Group, SMEs in emerging or developing countries fulfil an even more important economic function because they are primary creators of what is most needed: jobs. In Lebanon, 82% of employment opportunities are generated by SMEs. Moreover, integrating SMEs with the banking system brings an element of stability with many macro-economic benefits to the Lebanese economy. This is in the interest of Bank Audi as the leading bank and one of the largest private sector organisations in the country.

Based on numerous findings, the SME market segment is underserved by Lebanon’s banking industry and can even be seen as “virgin territory”. SMEs are more than ever in need of access to finance, not to mention that they have a major issue with collaterals banks usually request before granting any loan. Furthermore, small entrepreneurs have generally shown reluctance to deal with banks because they have the perception that banks are only interested in big businesses, and they believe that the processes adopted by banks’ commercial departments are too cumbersome; another concern SMEs have is that they believe banks regard them as potential customers for loans, and never look at them from a relationship perspective, oblivious to their wider needs for non- nancial services.

Not to mention that SMEs major’s pain point was the proximity issue, as these small businesses could not be served in all Lebanese regions, especially those located in remote areas.

Bank Audi sees this as an opportunity to establish relationships by providing qualified and basically sound SMEs with affordable credit in the expectation that these relationships will turn into bonds of loyalty with long-term profitability.

What Did Bank Audi Do for SMEs?
We have differentiated our offering and approach according to four major pillars: the first pillar is the comprehensive offering, which was designed to enhance a full relationship with the client, not one based on selling products.
The second pillar is proximity. We are present everywhere in Lebanon, in our entire branch network and in dedicated SME business centers. The third pillar is in access to lending which we helped facilitate through structured products and no requirement for collateral up to a certain amount, which is a real competitive edge over other banks. Even our product structure represents a sort of consultancy, because our front office people know what the working capital’s needs are and what type of facility might match their requirements, or what other products might answer their long-term and business growth needs.

And the fourth pillar is the easy and swift processing. SMEs have real concerns over the time that applications take and the slowness of the process. The infrastructure we’ve worked on makes it a speedy process, while taking into consideration the lending criteria and standards that Bank Audi requests.

Those four pillars were determined through an extensive research process including the focus groups that were part of the planning and implementation phase.

Bank Audi will not depart from its conservative banking standards, but emphasises that the SME division will be agile and flexible, driven by the approach to meet the full banking needs of all kinds of businesses, with the business owner’s experience being the main criteria when evaluating her or his eligibility for receiving credit.

The idea is not how many clients we can acquire in terms of number. Of course, we want to do good business and good pro t, but the rst objective is to build the day-to-day relationship with the customer and have a customer-centric culture. Then the business will come.

Customised Offering to Encourage and Support SMEs
In addition to what has been done to support SMEs, Bank Audi has allocated LBP 1 trillion to this segment at a reduced interest rate the first year.

We have carefully studied our prices and reduced them to lessen the burden of heavy interest rates and installments.

Achieving our target, which is to invest LBP 1 trillion to develop and support SMEs during 2017, will contribute to real GDP growth by 0.65%, while creating 4,797 new job opportunities and reducing the loan dollarization ratio by 0.9%.

This initiative sheds the light on the substantial role SMEs play in Lebanon’s economic growth, as well as on our corporate social responsibility towards the national economy.