THE majority of Micro-Small to Medium Enterprises (MSME’s) in the country, are failing to access government loans because they have not been formalized, Deputy minister, Noveti Muponora, revealed Wednesday.
According the deputy minister of Small and Medium Enterprises, available funding facilities are the Reserve Bank of Zimbabwe (RBZ)’s $90 million and the $15 million from Small Enterprises Development Corporation (SEDCO).
He was responding to questions at the Banking and Micro Finance Summit in Harare.
Muponora said government was making efforts to formalize the sector, noting a formalisation strategy was already in place and had been approved by cabinet.
“Some loans come through Agribank and those without bank accounts can’t access them,” he said
He said the major challenge was the absence of incentives for SME’s to formalize, adding that government was now working with other stakeholders to ensure there were incentives.
The minister said the formalization of the informal sector would help not only grow the country’s Gross Domestic Product but would also ensure the growth of the SME’s.
“We are trying to instil a business culture among the SME’s and also improve the ease of doing business. We have cut the number of days required for SME’s to register their businesses and have also reduced the money they need to register and the Ministry of Finance has taken note,” he said.
The cost of formalizing, the Minister said, had been higher than the benefits the SME’s would get, noting that all that had now changed.
Muponora said there was also need for loan beneficiaries to be trained on how to present proper and bankable business proposals to ensure they met requirements demanded by banks and other lending institutions.
He said the Ministry had instructed its officers to train SME’s, adding quite a number had been capacitated on project proposal writing.
In May this year, the government, through the National Financial Inclusion Strategy, availed funds via the RBZ in an effort to improve access to finance by those in the SME’s sector.
The facility was distributed as follows; Gold Support Facility ($40 million), Women Empowerment Fund ($15 Million), Cross Border Facility ($15 million) with the Horticulture Facility and Business Linkages facilities getting $10 million apiece.Advertisement
However, most players in the sector remain outside the formal realm mainly due to fear of heavy taxation that came with formalization.