The Sunday News
THE Zimbabwe National Chamber of Small and Medium Enterprises (ZNCSMEs) says it is planning to set up a financial institution for growing entrepreneurs by 2018 as a way of improving their ability to access funds to enhance their business entities.
ZNCSMEs president Mr Daniel Chinyemba said SMEs were facing a myriad of challenges in their bid to access loans from financial institutions to start or recapitalise their business.
He said this at the official opening of the Micro, Small and Medium Enterprises Finance Expo in Bulawayo on Friday.
Mr Chinyemba said SMEs had become the largest source of employment in the country.
According to the Firscop survey as of 2012 the sector employed 80 percent of the country’s employable population and 99,9 percent of people living in the rural and peri-urban areas.
“We have an objective that by 2018 we establish a financial service institution, which is tailor made to suit our requirements as SMEs and we also promote SMEs to graduate from being micro to small, small to medium and medium to large corporates.
“SMEs and co-operatives lack what is called acceptable collateral, which is perceived by financial institutions as being the standard tool for someone to borrow but we do have collateral but we don’t have acceptable collateral which are title deeds but we do have a lot of capital that can be used but it’s not acceptable and because of that we are faced with poor access to finance,” he said.
He said apart from the financial institutions’ stringent lending conditions SMEs had to bear the brunt of short term loan tenures, which hinder the growth of their businesses.
“The models that are used by financial houses here in Zimbabwe for most of their products are primarily meant to address their fears of risk mitigation and profit motives rather than addressing the needs of the SMEs. This is why we are not surprised when banks and financial institutions insist on collateral because we know they are trying to protect their funds rather than service their customers,” Mr Chinyemba said.
He said Government should work towards incorporating all small and medium scale SMEs into the formal economy to improve its revenue inflows.
“We also contribute to export earnings. We contribute 60 percent to the Gross Domestic Product but regrettably the majority of SMEs remain informal with little contribution to the country’s fiscus. We do contribute indirecty but we also want to contribute formally. It’s our drive that at the end of the year all SMEs will be formalised,” Mr Chinyemba said.
