THE small-to-medium enterprises sector has slowly become the bedrock of economic growth in Zimbabwe as most of retrenchees and graduates have been absorbed in this sector.
The sector has reignited the dynamism required to push development in Zimbabwe.
According to the Ministry of Small to Medium Enterprises and Co-operative Development, the Micro Small to Medium Enterprises (MSME) development sector has 3,5 million MSMEs employing 2,9 million people.
This has resulted in the sector contributing more than 60 percent to the GDP.
It is against this background that Government is trying to ensure that the MSMEs are provided with the necessary tools to ensure that they grow into large entities that can further provide decent jobs, alleviate poverty and address economic inequalities in society.
Speaking at the launch of the MSMEs funding facilities, Vice-President Emmerson Mnangagwa said it was imperative to address the challenges of access to finance for the MSMEs.
The funding facility is to the tune of US$90 million.
“The MSMEs are a critical sector that is usually excluded by financial institutions and as Government, we recognise the critical role played by the MSMEs and co-operatives in addressing the issues of poverty reduction, job creation and income generation,” said VP Mnangagwa.
“That is why the Ministry of Small and Medium and Co-operative Development in conjunction with the Reserve Bank of Zimbabwe (RBZ) have organised this important launch in order to avail funding facilities for five sectors.”
The funding facilities will be availed for the horticultural farmers, cross border traders, small-scale gold miners through Fidelity Printers and Refiners, Women Empowerment Fund and business linkages.
VP Mnangagwa urged the financial institutions to have packages placed within the reach of those whom the funds are destined for and encouraged the MSMEs and co-operatives to leverage on the funding to meet their financial needs.
“Get enough information on the financial products and services available,” said VP Mnangagwa.
“I encourage you to interact with financial institutions and build trust and good relationships with a view to accessing funds.
“I am aware that banking institutions require bankable project proposals, including collateral security, when conducting their business.”
He added that the RBZ is working on a new collateral registry which will address collateral issues.
The establishment of a Credit Guarantee Scheme, said VP Mnangagwa, would also facilitate access to finance by SMEs without collateral through credit risk sharing between the RBZ and financial institutions.
“The ongoing registration and formalisation of MSMEs, the human capital developments, including use of incubation centres and a review of our commercial laws, to allow for movable assets to be used as collateral for loan applications, are intended to address this challenge,” said VP Mnangagwa.
“Government has moved to sanitise the sector by coming up with a National Financial Inclusion Strategy which will ensure that MSMEs and other marginalised groups are included in the economic growth and development of the nation.”
VP Mnangagwa added that the National Financial Inclusion would ensure the effective use of a wide range of quality, affordable and accessible financial services provided in a fair and transparent manner.
Through Command Agriculture, VP Mnangagwa said Government has demonstrated how access to capital and proper business planning and implementation can enhance production and productivity.
The horticultural facility will get US$10 million, while the cross border facility would receive US$15 million.
Under the cross border facility, all cross border traders are to open accounts with Agribank and deposit all cash from their respective commercial activities.
Upon application and meeting all the requirements stipulated by the Cross Border Association (CBA), members can access funding through Agribank for local production of products to be exported.
Where one intends to travel out of the country on business, the member will seek the approval of CBA after presenting his/her bank statements from Agribank.
CBA would then advise Homelink of the members requiring funding and Homelink would avail the foreign exchange in cash or through an international card.
And, the gold support facility will get US$20 million to support small scale and artisanal mining operations in order to increase gold production in the country.
The Women Empowerment Fund will get US$15 million while the business linkages facility will get US$10 million.
The business linkages is targeted at availing funding for agricultural production by farmers to provide feedstock into manufacturing for value addition for export or local consumption.