PHILLIMON MHLANGA
The Insurance and Pensions Commission (IPEC) has approved Prescribed Assets applications worth ZWL$60m to finance SMEs in a major boost for the sector which is reeling from the effects of the Covid-19 lockdown measures.
Prescribed assets are bonds or securities issued by government or local government, quasi-government organisations or any other bond that may be accorded the Prescribed Asset status.
IPEC commissioner general, Grace Muradzikwa confirmed the approval of the funding adding that the SME sector “employs many people along the value chain”.
Insurance companies and pension funds are compelled to invest a certain threshold in prescribed assets stated in Section 26 of the Insurance Act [Chapter 24:07] and section 18 of the Pension and Provident Funds Act [Chapter 24:09].
However, they have been struggling to meet the minimum required threshold.
SMEs are important for driving the growth of the economy and for creating employment opportunities.
Zimbabwe’s SMEs contributes more than ZWL$10bn to the country’s gross domestic product and employs more than 80% of the country’s total workforce of close to 10m, according to official data obtained from the Reserve Bank of Zimbabwe.
Zimbabwe’s economic crisis has forced most corporate giants of yester year to close operations, leaving the SMEs covering the gap.
Consequently, most commercial banks , which previously viewed SMEs as risky, now have a dedicated SME desks signifying the role small businesses are now playing in the market.
However, most SMEs have been adversely impacted by the Covid-19 induced level four lockdown, which the President, Emmerson Mnangagwa on Monday this week further extended by two weeks.
Government has availed about ZWL$500m to cushion SMEs and players in the informal sector from the adverse impact of the Covid-19 induced lockdown, according to the Minister of Women, Community, Small and Medium Enterprises, Sithembiso Nyoni.
She said Covid-19 pandemic lockdown restrictions were making it difficult for the ministry to distribute the funding in different parts of the country.
