Chronicle Editor
Judith Phiri, Business Reporter
SMALL to Medium Enterprises (SMEs) in Bulawayo have appealed to stakeholders in the financial services sector to consider tailor-making conditions for loans in foreign currency to their level so that they retool and recapitalise their businesses for production of quality products.
They said most financial service providers have loans that were not accessible to the growing SMEs, something they felt was hindering their growth. SMEs play a crucial role in the economic growth of the country, contributing to income generation and job creation. However, limited access to finance remains one of the major obstacles hindering SMEs’ growth and development.
According to the MSMEs 2021 Survey, the sector is made up of 3,4 million businesses countrywide and provides full-time employment to over 4,8 million people. The 2022 Finscope SMEs Survey, highlighted that MSMEs contributed US$8,2 billion to national GDP. In an interview, Mr Mongameli Ncube who owns an SMEs in sportswear said obsolete machinery was hindering their growth.
“As SMEs we are faced with a number of challenges, we used to get orders of more than 100 units, however, we are now down to less than half of that due to competition from cheap imported clothing that is finding its way into the country. We are in need of loans to acquire the latest machinery to produce standard and quality products which we can also export. The loans will go a long way in ensuring that we are able to import the raw materials we need.”
He said retooling was also critical for small businesses to improve their capacity utilisation, while expanding their product base. Mr Ncube said accessing foreign currency loans was critical as most of their clients were paying them in local currency.
“Most schools that we do sportswear for pay us in local currency and these payments also delay coming, which becomes a problem for us when we want to source raw materials. Most financial services providers have loans that are not accessible and affordable to us as small businesses, this needs to be addressed because it is hindering our growth,” he said.
Ms Joyce Mlilo who is into essential oils production said shortage of raw materials and high production costs also affected the sector to retool.
“We acquire some of our raw materials from outside the country, while we sell most of our products in local currency. This then makes it difficult for us to acquire raw materials from other countries. We are also faced with high costs of credit, complicated application procedures and collateral requirements when seeking funding. Local interest rates from banks and microfinance institutions or digital lenders as well are steep for us teething businesses.”
Bulawayo SMEs chairperson Mr Coustin Ngwenya said lack of access to foreign currency was presenting challenges to the SMEs’ retooling drive. He said there was a need for financial linkages as SMEs have to be financed to expand their businesses.
“We are working on linking them to banks, micro-finance institutions and donors. For credit schemes, we will try to engage financial institutions to create loans for SMEs, especially long-term. We also need to finance short-term activities like order-financing,” said Mr Ngwenya.
Zimbabwe National Chamber of Commerce (ZNCC) Matabeleland chapter past vice-president, Mr Louis Herbst said retooling was key for businesses to be competitive and tap into African Continental Free Trade Agreement (AfCFTA).
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