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SEDCO is courting investment partners to raise capital required for setting up an SME bank, Small and Medium enterprises, Co-operative Development Minister Sithembiso Nyoni said. In an interview on the sidelines of the Zimbabwe banking and micro-finance summit 2014 yesterday, Minister Nyoni said setting up of an SME bank has become a priority.
“We have approved that the setting up of the bank would be under the stewardship of SEDCO and the announcement of a new board is set for this week.
“We envisage that a pool of resources will be created once an SME bank is put in place. This will facilitate easy access to funding and loan financing to micro and small to medium scale enterprises,” said Minister Nyoni.
Government gave SEDCO the green light to set up the bank last year. According to Minister Nyoni, funding remains an impediment to the process but some local financial institutions have expressed interest in the project.
She said optimism is high that the capacitating of SEDCO under the Zim Asset economic blue print will set the ball rolling in the creation of the bank.
SEDCO continues to struggle due to the strains of a high default rate from SMEs which have failed to pay back loans borrowed from the enterprise.
The default rate is currently estimated at 20 percent. The company at one time announced plans to auction its properties surrendered as security in order to raise funds for its operations.
Minister Nyoni said there was need to reduce the tax band for SMEs as the current regime is too high for the sector and is stifling growth.
To that effect, her ministry will make submissions to cabinet to address the issue.
“We will be making submissions to the Cabinet to consider reducing the tax band for SMEs,” Nyoni said. “The taxes are currently too high and not sustainable for these small businesses.”
ZIMRA representative Mr Mkululi Nkhulumo said there was need for a framework to advance SMEs’ compliance with taxation and customs.
He said the SMEs’ sector is the biggest in the country yet there are very few incorporated in the tax bracket.
Statistics show that the SMEs sector has become the largest source of employment in the country, creating 4,7 million jobs and with an estimated US$7 billion circulating in this informal sector.
Online Reporter