Thursday, June 14, 2012
By Gift Chanda
Wed 13 June 2012, 13:24 CAT
GOVERNMENTS need to take a broader approach in addressing challenges of small business financing, urges the Association of Chartered Certified Accountants.
In its latest Global Agenda on Access to Finance for SMEs, the ACCA Global Forum for SMEs called on global leaders to offer more support to Small and Medium Sized Enterprises (SMEs) in gaining access to finance by ensuring that a broader approach is taken to policy development for the SMEs sector and that there are greater levels of co-ordination at a global level.
It observed that more coordinated and consistent efforts were needed when it comes to SME financing policy.
The ACCA's call for increased financing to small businesses comes ahead of the G20 summit which will be held in Mexico between June 18 and June 19, 2012.
Mexico, which holds the Presidency of the G20 for 2012, has put fostering financial inclusion to promote economic growth among its five priorities for the G20 this year.
The Global Forum's agenda outlines the challenge facing the G20 in the area of financial inclusion, and that official 'SME' or 'enterprise' policy forms only a small part of the actual policies relevant to the development of SMEs.
The Global Forum argues that more attention ought to be given to how central government departments impact on SMEs who may have more influence on how SMEs access finance than the departments or agencies responsible for business and enterprise.
"For example, those departments responsible for fiscal policy, justice or employment law may well have a bigger effect on SMEs' access to finance - through their decisions on tax policy on equity funding, setting up or developing better access to efficient credit information facilities right through to well-functioning property and contract law frameworks," ACCA stated.
To reduce SMEs defaulting on loans, the Global Forum advised leading institutions such as banks to actively get involved in their SME clients' businesses by offering professional advice.