Huge transaction fees choking small businesses, says Gatera

The high cost in financial transactions is a big threat to business growth in African, and Rwanda in particular, James Gatera, the Bank of Kigali chief executive officer, has said.Gatera said the charges eat into the profits of businesses, especially small-and-medium enterprises (SMEs), stifling their growth.Gatera advised businesses to deploy information and communication technologies (ICTs), saying this could help reduce some of the operational costs they incur. “Entrepreneurs, especially SME operators, need access to funding to be able to install ICT systems and develop products that can reach everyone. This will make it possible for businesses to earn some profits and expand,” he pointed out.Gatera was discussing a paper on the factors required to drive sustainable enterprise growth in Africa at the just-concluded Transform Africa Summit in Kigali. Gatera said that over 80 per cent Africans, including SME operators, do not own bank accounts because they fear transactional costs. He noted that this puts their businesses at risk. He stressed the need to promote mobile banking by banks (where people can even use their mobile phones to acquire loans), arguing that this could encourage citizens to open bank accounts. “We have no choice, but to embrace the mobile financial revolution and other innovations to help SMEs grow.”Nic Rudrick, the Liquid Telecom group chief executive officer, urged the government to support SMEs, stating that the sector was the major driver of growth. He added that investing in infrastructure alone will not spur the development of African economies. “About 90 per cent of businesses in Africa are in the SME sector. However, it’s unfortunate that they aren’t contributing as much as they should be because of financial barriers,” Rudrick noted.Gordon Cooper, the head of emerging markets at Visa Inc, however, advised entrepreneurs not to look at the banks as the only solution for their funding needs.

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Huge transaction fees choking small businesses, says Gatera