Hatton National Bank’s Niluka Amarasinghe shares insights about how the bank is driving diversity and inclusion in the rural economy by supporting micro, small and medium enterprises in the hinterland. Amarasinghe, Head of Leasing/ SME Products and Partnerships, is engaged in driving the bank’s SME strategy. He begins by explaining how HNB is empowering women in the SME sector:
Micro, small and medium enterprises pervade the rural economy that comprises mostly farming communities and the self-employed segments, which are also two major contributing sectors in our SME portfolio. In the SME sector, women have a formidable representation.
HNB predominantly supports them by providing funding for their capital requirements. By their very nature, small scale businesses take longer to book profits and must have enough cash in hand to finance salaries and pay for day to day expenses and inputs such as raw materials. So at HNB, we also support their working capital requirements. However, SMEs, particularly those led by women, have other needs apart from capital and liquidity support to grow and upscale their businesses. That is why we have adopted a holistic approach to the SME segment.
Today, HNB provides comprehensive support to SMEs – in collaboration with other development agencies where appropriate. We help entrepreneurs upskill, build leadership, industry knowledge and financial management capabilities, strengthen supply chains, and invest in people and technology – perhaps the two most critical requisites for growth in modern times. We also help them meet the standards and obtain the necessary certifications to enter export markets.
Our role is three-fold: we provide financing, build capacity and establish networks with development agencies and business chambers that support SMEs to grow, especially those that focus on uplifting women entrepreneurs and women-led businesses. We have curated programmes along geographical lines to best capture the specific needs of small businesses in different areas around the country.
We have opted to establish and engage corporative societies around specific industries in a given location because it is more efficient. Such a structure makes us more effective and impactful as we pursue our quest to uplift entire village communities, not just individual businesses.
The biggest constraint to barefoot banking is logistics. Due to transportation and infrastructure constraints in the deep hinterland, we deploy agents to visit these isolated, faraway communities where people do not have the luxury to walk into a downtown bank branch at leisure. To demonstrate our commitment, we go to them!
Why is it a critical agenda item in the bank’s overall strategy and vision?
SMEs are the backbone of our economy. They employ more than half the working-age population, and their output accounts for nearly half of GDP. They are a vital clog in the economy’s supply chain that feeds large corporations. HNB, having understood this phenomenon, considers SMEs a critical component of our loan book.
By helping SMEs grow, we are making a significant contribution to economic growth by uplifting rural communities. In other words, we are facilitating equitable and sustainable development and growth, and why taking a holistic approach to SMEs is so vital to us. Urban-based SMEs have different challenges that require more sophisticated capabilities to sustain and thrive in competitive markets. So, HNB has focused its product range and deliverables for the entire SME sector in rural and urban communities.
How is the bank creating more opportunities for women in the SME sector?
Unlike most other sectors of the economy, women are a considerable force in the SME sector. There are far more women entrepreneurs and business leaders in this sector than anywhere else. So it comes as no surprise that much of what we do links directly to uplifting women in our communities across the country. As I have already discussed what we do for SMEs, let me elaborate on our efforts to help them expand their reach. One such initiative is connecting small businesses with export markets.
Rural women produce many goods with the potential to attract demand in overseas markets. However, connecting with export markets is a formidable challenge because of the numerous technical requirements such as standards, health and safety and various testing and certification requirements. We are trying to bridge this gap by working with several development organisations, business chambers and associations that support women-led SMEs to scale and reach the next level of their businesses. We create the infrastructure to enable this to happen.
So tell us about your barefoot banking concept and how it fits into the diversity and inclusion agenda of the bank?
For years, SMEs fell prey to informal lenders and subprime lending institutions and their exorbitant lending rates. The initial concept and purpose of barefoot banking centred around reaching communities that could not easily reach or had limited access to formal banking systems.
Today, we have extended barefoot banking to include the empowerment of small entrepreneurs to make their businesses more efficient and bankable.
Along the way, HNB has developed its expertise, knowledge and understanding of SMEs. We did this by deploying our microfinance officers to these secluded areas. Our officers stationed in those areas learned the needs of the businesses, their financial requirements, and capacity gaps to expand their market reach for growth.
Often, small businesses in the hinterland do not see the big picture, nor can they grasp the potential and possibilities that can open to them. One of our primary objectives is to create more awareness and help SMEs realise their potential in the ways I have elucidated elsewhere in this interview.
In rural areas where conservative and traditional biases hold the fort, women continue to confront challenges like being expected to stay at home and care for the children, and sometimes their husbands too!
However, women are increasingly challenging the biases and stereotypes holding them back. However, rural communities expect women who run businesses to devote time managing their households, doing their chores, and taking care of kids. So, many women cannot afford the energy and time to grow a business beyond what it is, a cottage industry.
We have seen female entrepreneurs improve their knowledge, develop their skills and grow as leaders, growing and transforming their businesses along the way. Or she has employed people good enough to manage her business operations from finances to logistics to human resource management. However, there can be other challenges. For instance, women still face mobility constraints that can hurt a business, and we are keen to address those gaps as a bank committed to SMEs and uplifting women in the economy.
We are both encouraged and inspired by the many success stories we have been privileged to witness over the years of women-led SMEs. We have seen some of them progress to become mid-range corporates. It is not easy to build a mid-range corporation from a microbusiness, but we have seen women with extraordinary courage, dedication and leadership skills make that happen.