Andrew
Michael Tome
Business Reporter
GOVERNMENT says it will be capitalising some financial institutions to increase their capacity to support and empower small to medium enterprises initiatives in 2023.
This is intended to curb difficulties to do with working capital through the development of customer-centric financial products and financing options that meet the needs of women, youth and smallholder enterprises.
Generally, the initiative strives to upscale marginalised communities, small businesses through wealth-creation projects that will help in generating better employment opportunities.
Financial support to smallholder enterprises will act as a stimulant for entrepreneurship development for entities dotted across the country.
According to the recent FinScope survey Micro, Small, and Medium enterprises (MSMEs) are a critical component to Zimbabwe’s economic growth as they now contribute around 60 percent to the national GDP which explains the need to allot financial support to the sector.
It also discovered that the sector now contributes up to US$8, 6 billion to the national GDP. As such Finance and Economic Development Minister, Professor Mthuli Ncube in the 2023 National Budget Statement said the treasury would be allocating funds for empowerment initiatives.
These will encompass $370 million to the Women Development Fund, $3 billion to Small and Medium Enterprises Development Corporation (SMEDCO), Community Development Fund ($330 million), Zimbabwe Women’s Microfinance Bank ($3 billion) Empower Bank ($3 billion), National Venture Capital Fund ($4 billion).
The move is in line with the dictates of the National Development Strategy (NDS 1) which seeks to uplift lives of ordinary Zimbabweans with the intention of attaining a middle-income economy by 2030.
Entrepreneur specializing in the furniture business, Lincoln Garai lauded the government support towards emerging businesses saying funding was a key factor in coming up with a successful venture as operations demand funding to come up with a good output.
He said his line of business in particular required adequate funding to meet capital requirements for raw materials and labour.
“Funding is a critical factor in upscaling youth-driven enterprises but banks need to be considerate when it comes to funding youth-owned businesses, many have good ideas but they have suffered stillbirth given the inability to access funding due to banks’ prohibitive requirements,” said Mr Garai.
The MSME sector significantly contributes towards wealth creation and reduction of poverty among ordinary Zimbabweans and currently employs more than 1,7 million people with the majority being women in the rural areas.
Small and Medium Enterprises Association of Zimbabwe (SMEAZ) chief executive Farai Mutambanengwe indicated that the initiative was notable but there was a need to increase the amount.
“The recognition of the women and SME sector is a welcome development but there need is for the allocations to be improved so that we can create impact as a sector, if you look at areas like agriculture it was allocated more money and there we are more likely to get better results,” said Mr Mutambanengwe.
At the recently launched FinScope MSME and consumer survey Reserve Bank of Zimbabwe (RBZ) Deputy Governor, Dr Jesimeni Chipika said the National Financial Inclusion Strategy (NFIS) which she superintends, will deal with improving the regulatory environment, access to markets, and provision of working space for small ventures.
“Microfinancing remains key under NFIS 2, by virtue of its ability to reach out to the marginalised and those at the grassroots level. The initiative is meant to enhance capacity building, development of business and technical skills of the micro, small and medium enterprises,” said Dr Chipika.
The empowerment initiatives are also meant to ensure equal opportunities for all, irrespective of gender, in line with the thrust of NDS1 of “leave no one and no place behind.
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