Home » General » SMES IN ZIMBABWE CALL FOR SETTING UP OF MICRO-FINANCE INSTITUTIONS

HARARE, May 12 — Zimbabwe’s small and medium enterprises (SMEs) sector wants the government to facilitate establishment of micro-finance banks (MFBs) to enable SMEs to raise funds for their operations.

SMEs Association of Zimbabwe founder Farai Mutambanengwe said here over the weekend that local banks were not extending much support to the sector while failure by the government to capitalise the Small Enterprises Development Corporation (Sedco) was worsening the situation.

“Traditional banks have proved unmotivated to set up SME-specific products, and their SME banking divisions are always subservient to their corporate divisions,” he said. “This results in SME issues always being buried at the bottom of the tray.”

Dubbed the engine for economic growth, most economic activity in Zimbabwe is taking place in the SME and informal sectors as the formal sector shrinks on the back of unrelenting liquidity constraints.

At least 7.0 billion US dollars are estimated to be circulating in the sector, more than double the amount in the formal economy.

Mutambanengwe said the Small Enterprises Development Corporation (SEDCO), which the government set up to finance SMEs as well as provide them with training, was failing to discharge its duties because of lack of funding.

He said athe bsence of financial support from traditional banks had resulted in the SMEs sector turning to micro finance institutions where funding was available at very high interest rates, making the sector unviable.

Mutambanengwe accused banks of promoting external competition through funding importers rather than the local productive sectors. “This issue of lack of funding can only be addressed by the formation of micro finance banks,” he said.

The Reserve Bank of Zimbabwe has expressed its readiness to license MFBs with the minimum capital requirement for establishing a micro-finance bank set at 5.0 million USD.

SOURCE: NEW ZIANA

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