The Dawn of SME financing


As an internal auditor at heart Dawn Chatema (pictured) believes in adding value in everything she puts her mind and hands to.

Her philosophy is that knowledge shared is power multiplied and she strives to learn as much as she could from everyone she interacts with.

“I do not choose who to learn from but believe there is something to learn from every individual. My professional mission is to be a solution in my sphere of influence and not only possess skills or expertise for my benefit but also for the benefit of those I work with,” Chatema told Business Times this week.

The executive is the chief operating officer of the Zimbabwe Receivables Market Place (Private) Limited (ZRM) formed last year to offer working capital solutions for small to medium enterprises (SMEs) through receivables discounting and trading.

ZRM is jointly owned by the Zimbabwe Stock Exchange and Harare Receivables Exchange (HRE).

Chatema admitted that receivables financing was a fairly new concept in the Zimbabwean market with most relying on bank and microfinance loans as a source of funding and a working capital solution.

“It is then crucial for us to educate the market on receivables financing especially to the SMEs which are at times, marginalised and fail to obtain loans due to a lack of collateral and investors who may be looking to diversify and invest in an alternative investment class,” she said, adding that ZRM was engrossed in educating the market and ensuring that it registers a high number of suppliers and financiers on the platform.

Chatema said their efforts to drive the platform were derailed by a global pandemic and the subsequent lockdown imposed following the outbreak of Covid-19.

“The market did not quickly warm up to the concept of receivables financing since people in general, are used to taking loans from the bank.

We, however, targeted SMEs which usually fail to obtain loans due to a lack of collateral.

Engaging these groups was easier.

We will continue to educate the market so that the concept is widely understood and received by both our suppliers and buyers,” the executive said.

There are three parties on the ZRM platform—suppliers, buyers and financiers. Suppliers are companies selling goods and services on credit terms and wishing to raise working capital based on the outstanding invoices.

Suppliers should be tax compliant and meet the criteria specified by ZRM. Buyers are purchasers of goods and services that have been supplied on credit. 

The platform allows suppliers to sell confirmed invoices which will assist their ability to restock and supply and strengthens their supply chains especially those in the SME sector which typically struggle to accommodate credit terms or delayed payments.

Financiers are institutions with funds typically looking for short term investments with attractive returns by bidding for the invoices from registered suppliers at a discount. A supplier sells goods to a buyer and receives an invoice. 

The supplier uploads respective invoice onto the ZRM platform. The buyer reviews and confirms the approved invoice.

Registered financiers bid for the approved invoice.

The supplier selects the best bid and gets financed by the successful bidder. The buyer makes settlement payment to ZRM.

The financier receives advance amount plus discount. 

Chatema said the local market was yet to warm up to receivables financing as the accepted mode of financing has been “your typical bank loan or loans backed up by receivables”.

Benefits of receivables financing for suppliers include quick access to working capital, no assets required as collateral, best discounting rates due to participation of multiple financiers in auction and improved cashflow management.

She said financiers will have access to alternative investments, market demanded yields and improving social impact through SME support.

Buyers enjoy efficient payment cycles.

As a meeting place of suppliers and financiers, Chatema admitted that growth of the platform has been a bit slower than anticipated given that the concept is new to the local market.

“However, we are educating the market and the market is starting to warm up to the concept,” she said.

Chatema said ZRM was in the process of engaging the relevant government arms (the Reserve Bank of Zimbabwe and Ministry of SMEs & Cooperative Development) in order to gain the support it needed.

“We hope to gain traction and succeed in obtaining the much-needed support as we strongly believe receivables financing will be a lucrative working capital solution for SMEs and an alternative investment class for investors,” she said.

In other jurisdictions, government support plays a crucial role in developing receivables financing as an alternative investment class and an efficient and effective working capital solution.

In India, the government supported the Receivables Exchange India Limited (RXIL) which was incorporated in 2016 as a joint venture between Small Industries Development Bank of India (SIDBI) and National Stock Exchange of India Limited (NSE).

SIDBI is the apex financial institution for promotion and financing of MSMEs in India while NSE is the premier stock exchange in India.

The Indian Government was supportive of RXIL’s Trade Receivables Discounting System (since its inception and took various initiatives to increase the traction in the form of workshops being organised by the Reserve Bank of India, MSMEs Ministry and through its other arms, Chatema said.

She said the Covid-19 pandemic brought mixed fortunes to ZRM.

On a positive note, the pandemic brought about a great need conduct business remotely and heavily relying on technology.

It was an opportune time for ZRM to have launched an automated receivables platform where clients do not need to visit our offices for registration and trading, Chatema said.

The downside was that lockdowns and business restrictions affected SMEs’ operations such that the rate of registration has been slower than anticipated, she said.

ZRM has an order book of ZWL$49.5m.  The platform does not offer US$ receivables, although plans are underway to make that happen. HRE is offering US$ receivables financing for exporters, Chatema said.

She said 41 SMEs have registered for the platform with the bulk in the process of finalising registration.

The platform has fully registered three financiers.

There are plans to rope in pension funds and asset managers to register for the platform.

“As they manage funds on behalf of clients, there are certain processes required to get approvals and comfort in investing into a new asset class,” Chatema said.

The shareholders, she said, have been supportive from the time the platform was an idea up until this day.

“They have been supportive financially, intellectually and also providing links and contacts to gain access to potential clients. Both entities [ZSE and HRE] have the mandate to ensure the entity is well capitalised and also run efficiently and viably,” the executive said.

A chartered certified accountant and certified internal auditor, Chatema has a passion for enterprise risk management, internal controls and a strong advocate of good corporate governance practices.

Her professional interests focus on Small-to-Medium Enterprises (SMEs) which have become a force to reckon with in the development of Zimbabwe’s economy.

Before joining HRE, the executive worked for auditing firm, Deloitte & Touché for 4 years where she got the foundation which has fortified her current role.

“I worked under the Risk Advisory Service line (internal audit, forensic audit, consulting), working on various companies in the manufacturing, retail, financial services, packaging, non-profit-making sectors. The experience gained is immensely helping me in my current roles especially with regards to risk management, controls design, policy formulation, and corporate governance,” said the executive who is the risk manager at HRE but seconded to ZRM.

She is studying towards her Certification in Risk Management Assurance qualification where she has shifted focus on until the job is done.

Chatema is reading Unique Woman by Edwin Louis and Nancy   Cole as she continues to discover herself as a wife, mother and professional and how to juggle the three roles.

She is inspired by her mother Mable Matshitse whom she described as a strong, determined, and prayerful woman who urged her to “always work towards achieving my dreams and to never give up no matter what”.

The last born in a family of three, she is married to Fungai Chatema and the couple has a 2-year old son.

“My family has been tremendously supportive along my career path right from the beginning, moreso, my husband and son who have allowed me to flourish in my career over and above being a wife and mother. 

“My family has supported me financially, emotionally and in every way possible, always encouraging and cheering me on.

I would not have been the person I am today without them,” the executive said.

Chatema is planning for life after ZRM and researching about weddings as she “would want to own and run a successful wedding business one day”.

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