SMEs struggle to access ZWL$500m RBZ facility

September 23, 2021



Local banks are demanding title deeds for small to medium enterprises (SMEs) to access the ZWL$500m availed by the Reserve Bank of Zimbabwe (RBZ), Business Times can report.

The facility is meant for SMEs to recover from the adverse effects of Covid -19, which has left many small businesses on the brink of collapse.

Small to Medium Enterprises Association of Zimbabwe CEO, Farai Mutambanengwe confirmed the latest development saying most SMEs do not have the required title deeds, meaning they are few takers of the critical funding.

“The ZWL$500m facility has been a white elephant for most SMEs because of the collateral requirement which needs to be in the form of title deeds.

“So, until we have a collateral registry that will allow SMEs to pledge assets like cars,  equipment, most of these facilities are announced but very few of our members can access them,” Mutambanengwe told Business Times this week.

The issue of access to funding for SMEs has been dragging on for a very long as the banking systems are yet to come up with packages or requirements that better suit the SMEs sector.

According to Mutambanengwe when some of their members do manage to access the funding they are given very little amounts which do not adequately cover the intended purpose.

“You do get some times either cooperative or group structures being allocated some money but it’s relatively nominal when you get it through entities such as Women’s Bank or Empower Bank.

But overall access to funding remains a very difficult terrain particularly for SMEs so, at the moment, the Z$500m facility is there but it’s only a handful of SMEs have been able to access it,”

SMEs are recognised as the backbone of any developing economy with the efforts they make to sustainable development, in terms of contributions to economic growth, creation of decent jobs, provision of public goods and services.

Following the debilitating impact of the Covid-19 induced lockdowns on the micro, small and medium enterprises (MSMEs), the MPC introduced a ZW$500 million facility to cater to the funding requirements of MSMEs.

The facility has a tenure of 12 months for working capital and up to three years for capital expenditure.  The interest rate is between 30% and 40%.

The facility is accessed through banks, microfinance banks as well as credit-only microfinance institutions.

As banks are the main financiers of the facility, this means that access to funding for SMEs will remain a mammoth task as most banks do not have departments that are adequately resourced to deal with the financial needs of the SMEs.

These hurdles associated with access to bank funding in most cases push the SMEs to approach money lenders who charge punitive interests.


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