Banks should be innovative to tap into MSMEs

RYAN CHIGOCHE

Banks should be innovative with regards to lending  to enable micro small to medium enterprises (MSMEs) access working capital, a new report has shown.

The inaugural report, State of Manufacturing Micro, Small and Medium Enterprises in Zimbabwe, launched yesterday said the sector needs financial inclusion for start-up and working capital as well as business expansion.

It said the central bank’s auction system for MSMEs should allow bidding for amounts less than US$2,000.

“Facilities that are targeted for MSMEs should be made more flexible so that they can be accessible. For example, the RBZ ZWL$500m facility requirement for collateral has made it impossible for most MSMEs because they do not have title deeds. Those that are able to access the funding are not getting sufficient amounts for their requirements and the rates are punitive,” the report said.

The Scientific and Industrial Research and Development Centre (SIRDC) launched the report that emanated from a survey that was done by the Technological and Commercial Information Promotion System (TIPS) and administered through SIRDC.

The survey which was carried out by TIPS a subsidiary of SIRDC.

Speaking at the launch SIRDC chief executive Robson Mafoti said TIP was driven by the information gaps on the MSMEs sector contribution to the economy to conduct the survey.

He added that he hopes the report would influence government policy on dealing with SMEs going forward.

“We need to be cognisant of the importance of SMEs. It is our hope that the findings of this survey and  recommendations thereof shall contribute to policy formulation and SME programming by government and other stakeholders,” Mafoti said.

Finance and Economic Development minister Mthuli Ncube commended the work that was done to come up with the report, who was the guest of honour standing in for the Vice President Constantine Chiwenga

He said the findings of the report indicates the potential of the sector to leapfrog economic growth.

“Government recognises the importance of. findings based on empirical study…The report will certainly inform and guide policy development for this sector. While the results indicate challenges in the sector, It is evident that there is potential for SMEs to drive the economic development of Zimbabwe,” said Ncube who was standing in for Vice President Constantino Chiwenga.