adminProsper Ndlovu Business Editor
THE small to medium enterprises sector has become a significant player in the economy and is creating employment opportunities for thousands of Zimbabwean. Its successes have, however, been blighted by general lack of funding and negative perception by some in the market. Chronicle Business Editor Prosper Ndlovu talks to CBZ Holdings chief executive officer Mr Never Nyemudzo about the attitude of banks towards SMEs, the potential it has and other issues.
PN: As a bank what is your overview sentiment about SMEs and their impact on the Zimbabwean economy?
NN: As a bank we believe that the SMEs sector has a critical role to play in the economic growth of Zimbabwe.
There is a lot of economic activity taking place in the SMEs sector.
The bank views the SMEs sector as having the potential to contribute significantly to the economy if it’s well-handled and supported.
To that end the bank set up the Business Banking Division, a product of the combination of SME department and Micro finance departments to specifically cater for the SMEs sector.
PN: Given that a larger percentage of people are now in the informal sector do you believe this sector could provide the key to economic transformation?
NN: It is estimated that 70 percent of the labour force is in the SMEs sector, with Zimbabwean SMEs in the last decade coming out of its confines to have a claim on the economic development front of the country.
We believe that the hitherto successes and benefits of the SMEs sector places the sector in a position to contribute significantly to our economy.
PN: What opportunities, if any, exist for the banking sector in the SMEs sector in general?
NN: l SMEs require less capital to set up
l They can be set up in previously disadvantaged areas.
l Lending is spread to various players thereby spreading risk
l Competition in terms of pricing and service delivery is intensified
l Most SMEs being owner managed have a quick decision making process.
PN: There is a general perception that banks do not want to support SMEs business yet your bank has proved otherwise. What kind of a support programme does your bank have for SMEs and how does it operate?
NN: The Bank, through the Business Banking Division, has taken advantage of the different local media platforms, to publicise its products and services offerings and to showcase our various successful clients.
The Bank’s extensive geographical spread has also made it possible for us to have a very wide reach.
This has resulted in a positive effect of creating brand awareness and extending our services to all the country’s provinces.
We encourage SMEs to interact, share ideas and forge partnerships with each other and even with large corporates.
The Bank also provides training to SME clients on managing their businesses. We link producers to value chain actors.
PN: Under this programme, how many SMEs are you assisting and how are you supporting them?
NN: We command in excess of 30 percent market share. We, among others, assist SMEs through the following:
l Offer products like start-up capital, working capital finance, overdrafts and loans, bridging loan finance, order finance, bank guarantees and advisory services.
l Mobilise deposits to fund advances to the SMEs sector.
l Work in liaison with Development Partners for affordable Lines of Credit which are extended to players in the sector and promote the use of plastic money.
PN: Could you comment on the success of this programme and perhaps challenges you have faced.
NN: When the Bank first went to market aggressively on inception of the Business Banking Division, the response was overwhelming.
We have however managed to service these clients and through word of mouth the numbers are growing.
The challenges experienced by some of the SMEs include diversion of funds by a few project promoters, stiff competition by clients in same industry, lack of succession planning in businesses and lack of proper business records.
To mitigate against these we have put in place training programmes to give our clients financial and business management skills.
As such we are pleased that some of the SMEs are graduating to corporate status through our nurturing.
PN: Could you shed light on how much have you spent on SMEs funding in the past five years and the kind of business you worked with.
NN: The Bank has spent a substantial portion of its resources in supporting SMES over the past five years.
More than $100million has been dedicated towards growth of this sector.
The Bank has also scouted for additional lines of credit.
Currently, we are offering financial support to sole proprietors, start-ups and registered companies in Zimbabwe which fall under the following economic categories: Manufacturing, Agriculture, Mining, Construction, Communication, Retailing, Distribution and Tourism.
PN: Explain the process of accessing funding at your bank by SMEs and the requirements you expect for one to be eligible.
NN: Requirements:
l Viable projects for start-ups
l Brief business outline – covering products/services, market, competition and future plans.
l Operational account with the Bank
lApplication Letter for facilities being sought, clearly outlining type of facilities, amount, purpose, source of repayment and tenure.
l Financials for the past financial year where applicable
l Latest Management Accounts where applicable
l Cash Flow projections covering the tenure of the facilities being applied for.
The Bank will engage all prospective clients and look at each application and discuss it on a case by case basis.
CBZ has been recognised as the best SMEs supporting bank in the country having scooped an award for such a feat at the just ended Zimbabwe national Chamber of Commerce (ZNCC) congress.
derick.khumalo