The Sunday News
Roberta Katunga in Mutare
BANKING sector lending to the Small to Medium Enterprises sector has gone down by about 1,7 percent in the last three years as the country’s biggest source of employment continues to receive the least access to funding, an official said.
Speaking at the 6th annual Buy Zimbabwe summit held at Golden Peacock Hotel in Mutare last week, Reserve Bank of Zimbabwe director and registrar of Banks Mr Norman Mataruka said despite contributing more than 60 percent of the country’s Gross Domestic Product (GDP), the SMEs sector received the least access to loans due to a myriad of reasons.
Mr Mataruka said lending to SMEs accounted for 4,1 percent of total banking sector loans as at February this year down from 5,8 percent in 2013.
“SMEs are considered an engine of economic growth and development in a number of developing countries including Zimbabwe. However, most SMEs are informal and lenders do not understand their operations,” said Mr Mataruka.
He said some of the constraints to funding SMEs included the bank risk culture where collateral requirements disqualify most SMEs and the perceived high risk as well as poor business enablers as compared to large corporates.
He said the central bank was moving in to enhance SMEs access to financial services.
“We will be introducing a number of measures that include the national inclusion strategy where we will be working with banks and eight thematic groups will be formed focusing on the SMEs. Another measure is the SMEs financing policy that will be tailor made to address the sector’s financial needs,” he said, adding that it was important to facilitate enhanced access to credit and use of movable collateral by borrowers.
In Zimbabwe according to the FinScope SME Survey of 2012, SMEs employ approximately 5,7 million people contribute more than 60 percent of the country’s GDP.
Meanwhile, Mr Mataruka said the country would be maintaining the multi-currency regime and would not be going the rand only route as being suggested by certain sectors of the economy.
“We cannot adopt the rand as our sole currency as this will mean that everything will be dictated from South Africa yet as a country we are also trying to build our own reserves. The rand usage is not an option that we will take,” he said.
The Bankers Association of Zimbabwe (BAZ) had suggested that the country adopt the rand as the trading currency given the amount of trade between Zimbabwe and South Africa and that it is a softer currency as compared to the US dollar.
Zimbabwe is using a basket of currencies that include the Botswana pula, Chinese yuan, Australian dollar as well as the British pound.
@robertakatunga
