The Sunday News
Shepias Dube Business Reporter
SMALL to medium enterprises are set to access $3 million availed by Arab Bank for Economic Development in Africa after the Sudan-based financial institution agreed to advance a loan to Zimbabwe for the sector seen as the country’s future economic fulcrum.
The fund, officials told Sunday Business, was agreed between the Ministry of Finance and the bank, but will be administered by the Small Enterprises Development Corporation, a parastatal that manages funding for the sector on behalf of the Government.
In an interview, Sedco chief executive officer Mrs Gladys Kanyongo said the money is meant for all projects classified as small to medium but emphasised that beneficiaries must exhibit project viability and related repayment capacity among other factors to minimise chances of defaults.
She could not reveal when the funds will be made available to SMEs since the Government and the Sudanese bank were still working on other conditions for the facility.
“The Ministry of Finance is polishing up the deal and we will issue a statement as soon as everything is in order,” she said.
She, however, confirmed that the repayment period will be up to 24 months and the interest rate will be pegged at 15 percent.
An official in the Ministry of Small and Medium Enterprises and Co-operative Development said they have recommended that beneficiaries of this facility should be given a grace period of up to six months depending on the nature of the project.
“Indications are the bank might give the Government a grace period before the repayments and it will be paramount if Government extends the same to the SMEs. We have since advised Sedco as the financing arm on this and we hope it will be accepted,” said the official.
Economists and business people who spoke to the Sunday Business applauded the Government for prioritising SMEs in its economic turnaround programme in line with the economic blue print, Zim Asset.
An official with the Chamber of SMEs Mr Shakie Nhamoinesu Museve said any capital into the sector was welcome as it will boost productivity.
“As SMEs we urge Government to continue sourcing funds for SMEs because if we get funding we would go neck to neck with big companies,” he said.
Confederation of Zimbabwe Industries president Mr Charles Msipa said it was noble for Government to seek financial assistance for SMEs because the majority of active population were employed in the SME sector, and economic activity has been shifting to the sector — which is a consistent pattern in many economies around the world.
“Funding of SMEs supports economic growth and employment creation in Zimbabwe. In addition, today’s SMEs can also grow to become the larger corporations of tomorrow and play their full role in economic development including tax payment to the fiscus,” he said.
Mr Msipa said while the facility was positive, there was a need for more funding for all sectors of the economy at concessionary rates.
He said other sectors like mining, agriculture and tourism were also capital thirsty, and the Government must also seek funding options to boost economic growth.
