GOVERNMENT has recognised the need to resuscitate the economy which has been crippled by Western illegal sanctions through channelling a revolving fund to Small and Medium Enterprises (SMEs), an official has said.
A revolving fund is a fund or account that remains available to finance an organisation’s continuing operations without any fiscal year limitation, because the organisation replenishes the fund by repaying money used from the account.
In an interview, acting director of resource mobilisation and project development in the Ministry of SMEs, Barbra Razemba said SMEs cushioned the high levels of unemployment therefore Government was committed to supporting them.
It was against this background that the ministry had sourced funds which would be channelled towards different youth income generation projects countrywide.
However, she did not disclose the amount.
According to Razemba, SMEs in all provinces would have an opportunity to benefit from the revolving fund through applying to the Small Enterprise Development Corporation (SEDCO) and the People’s Own Savings Bank (POSB).
She said the fund would be availed to individuals, sole traders, partnerships and those formally registered under the Companies Act or Private Business Act.
“Through cooperatives, qualified beneficiaries will have access to finance, project ideas and expert advice administered through SEDCO and POSB,” said Razemba.
Razemba said the application and verification process was aimed at empowering responsible youths who had the capacity of repaying the loans because the fund should revolve.
She added that those who are ineligible for funding are those that have an existing debt or those that have already benefitted from other Government facilities put in place to support SMEs.
However, Razemba expressed concern at the reluctance by youths to repay loans in similar revolving funds such as the Youth Fund which were disbursed under the Ministry of Youth Development, Indigenisation and Economic Empowerment.
Five years down the line, some youths have not repaid the loans while, some no longer have businesses, an indication that the funds were misused, therefore becoming an impediment to Governments progress.
“Over 70 percent of loans disbursed under the youth fund in the past four to five years have not been repaid, prejudicing the government of millions of dollars,” Razemba said.
“Early repayments help to maintain the continuity of the fund and this way our economy will be revived.”
The revolving fund, said Razemba, was there to ensure that families and communities were equipped and empowered economically.
Revolving fund accounts are set up for specified purposes with the provision that repayments to the fund may be used again for the same functions.
The main purpose of the revolving fund is to support income generating projects in line with Government’s policy of indigenisation and economic empowerment.
Focus is on primary production, value addition and export oriented projects and with a quick cash turnaround.
This reduces the unemployment rate of a country through the creation of entrepreneurial capabilities enabling beneficiaries to be self-sufficient.
Zimbabwe has shown signs of shifting away from a rough patch in its economic history and with willing stakeholders; the productive sector and the SME sector should be revitalised so as to turn the economic fortunes of Zimbabwe.
In the year 2008 the country went through economic hardships and many ventured into entrepreneurship.
The importance of SMEs is unique in that it is largely informal, but provides a large base of employment especially for the youths.
The SMEs in Zimbabwe have become bedrock for the economy, since it is on this informal sector that the nation’s economy depends.
It is believed that SMEs have significantly supported Zimbabwe in the face of the imposed sanctions which resulted in an economic meltdown.
The SMEs have been recognised as an important means in the economic growth of any nation by contributing towards gross domestic product (GDP), creating jobs, reduction in poverty, generate income and facilitate nation’s wealth thus resulting in national development.