Online Reporter
Tapiwanashe Mangwiro
Senior Business Reporter
ZIMBABWE’S small business and microfinance sectors have urged the authorities to implement practical reforms that address long-standing policy bottlenecks that continue to limit access to finance and constrain enterprise growth.
The appeal was made during the 2025 Annual National Financial Inclusion Conference held in Harare, where the SME (small and medium enterprise) finance and microfinance thematic working groups presented their key deliverables under the outgoing National Financial Inclusion Strategy II.
The conference, running under the theme “Unlocking Potential: Financial Innovation for Inclusive Growth”, drew participants from the financial sector, regulators, development partners and Government agencies.
In its presentation, the SME Finance Thematic Working Group said the operating environment for small and medium enterprises remains difficult and heavily weighed down by unfavourable policy measures.
“The current policy framework discourages banking by MSMEs (micro, small and medium enterprises), with the IMMT (intermediated money transfer tax) continuing to be a major deterrent,” the group’s report read.
It said complicated business registration and licensing procedures were preventing the formalisation of thousands of enterprises and pushing many into the informal economy.
The report went on: “Complex registration processes and licensing discourage formalisation by MSMEs.”
The group warned that the continued rise of informal financial channels was undermining the growth of the formal banking sector.
“The emergence of shadow banks has left many MSMEs outside the formal banking system.”
High levels of account dormancy were identified as a major concern, with small business owners struggling to meet compliance requirements.
“There is a need for Know Your Customer (KYC)-lite accounts and softer Anti-Money Laundering (AML) requirements to encourage formal participation,” the report added.
Poor internet connectivity, limited access to digital tools and lack of collateral were highlighted as key barriers to financial inclusion, particularly for rural-based enterprises.
The group observed that the absence of insurance cover among MSMEs had left most operators vulnerable to shocks such as natural disasters, while limited venture capital and weak crowdfunding models had constrained start-up funding.
“MSMEs are failing to meet borrowing requirements from financial service providers, especially commercial banks,” the report said.
The working group proposed that the next phase of the National Financial Inclusion Strategy should focus on innovative and practical solutions that can make banking and credit facilities accessible to small businesses.
It urged policymakers to simplify registration systems, expand access to affordable broadband, and create stronger linkages between formal banks and informal savings groups.
The report called for the development of new risk assessment tools using alternative data to make credit scoring more inclusive, while strengthening digital payment systems to promote efficiency and transparency.
Meanwhile, the Microfinance Thematic Working Group acknowledged progress made in expanding the reach of microfinance institutions, but cautioned that the sector continued to face several structural and regulatory challenges.
“Microfinance remains one of the key vehicles for reaching low-income communities, but affordability and responsible lending must be at the centre of growth,” the group’s report said.
It noted that most microfinance institutions were struggling with high operational costs and limited digital infrastructure, which restricted their capacity to expand into rural areas.
“High operational costs driven by weak digital infrastructure and manual processes continue to reduce efficiency,” the report stated.
The group called for the adoption of technology-driven solutions, including the digitisation of lending operations and greater use of mobile platforms to cut costs and expand outreach.
It also stressed the need for enhanced consumer protection mechanisms to curb predatory lending practices and ensure transparency in pricing.
The report recommended the establishment of a microfinance development fund to strengthen the capital base of smaller institutions and promote sustainability within the sector.
It further called for the creation of blended financing models that combine concessional funding, donor support and private capital to help microfinance institutions extend credit on a sustainable basis.
The Microfinance Thematic Working Group concluded its report with a strong appeal for innovation and collaboration across the sector.
“Financial technology must bridge the gap, not widen it,” the report emphasised.
Stakeholders at the conference said the forthcoming National Financial Inclusion Strategy III would provide an opportunity to align innovation with practical solutions for small businesses and low-income communities.
They said the Government, regulators and the private sector must work together to translate policy commitments into action that drives measurable inclusion and economic growth.
