Maravi

(ZIMBABWE GUARDIAN) Govt, banks fail to meet demand in SME sector

Govt, banks fail to meet demand in SME sector
By: New Ziana
Posted: Wednesday, April 14, 2010 12:49 am

THE Small Enterprises Development Corporation said on Monday the Government and financial institutions are failing to satisfy the huge demand for funding in the small to medium scale enterprises sector.

Sedco general manager Mrs Fortunate Sekeso told New Ziana that the corporation was searching for institutions willing to pour huge financial resources into the small enterprises sector.

"The demand for funding is huge and far outstrips the supply," she said, adding the size of the SMEs sector was another challenge when it comes to issues of funding.


Article continues below

SMEs are struggling to recover from the introduction of the multi-currency regime last year as the move left their balance sheets at zero.

Most financial institutions are not providing long-term loans as they are also struggling to remain afloat.

Mrs Sekeso said SMEs were in critical need of funding to boost their operations, which analysts believe are operating far below capacity.

She said the US$250 000 that the National Social Security Authority (NSSA) availed to Sedco in early March was taken up in "no time. When that funding was announced, we already had applications from SMEs," said Mrs Sekeso.

She described the NSSA funding as a positive development, which would greatly assist in the development of the SMEs sector.

NSSA has earmarked US$1 million annually to the sector through Sedco, which would be disbursed in chunks of US$250 000 per quarter.

Mrs Sekeso said the corporation expected to receive the second quarter allocation in June.

She said under the facility, SMEs were allocated loans amounting up to US$2 000. "For businesses, which are classified as SMEs it is not a lot of money but for the micro-business, it is quite a significant amount," she said.

The loans are payable in four months and attract an interest rate of 15 percent per annum.

Besides NSSA, Sedco was also getting financial support from financial institutions including the People’s Own Savings Bank and CBZ Bank.

The Zimbabwe government appreciates the capacity of SMEs to drive economic growth.

Economic challenges the country experienced over the past decade have prevented the sector, which sustains the majority of families in the country, from developing to its full potential.— New Ziana.

Labels: SMEs

posted by MrK @ 5:46 AM