adminThe Reserve Bank of Zimbabwe said yesterday it is negotiating with the Government to capitalise the Small to Medium Enterprise Development Corporation (SMEDCO) which is forging ahead with plans to upgrade into a microfinance institution. This comes as the central bank reported a drop in funding extended by commercial banks to SMEs to $154 million in the first two months of this year from $171,3 million during the same period last year.RBZ deputy governor Dr Charity Dhliwayo told the Parliamentary Portfolio Committee on SMEs that capacitating the SMEDCO, a Government run institution, would allow for more direct technical and financial support for the sector, which has become a key part of the Zimbabwean economy. “SMEDCO needs capacitation so that it can support SMEs more than what it is doing,” she said. Undercapitalisation has over the years side-lined the institution, previously known as the Small Enterprises Development Corporation (SEDCO), to a bystander. The institution has mostly received financial support for on-lending to SMEs from the National Social Security Authority over the years. Registrar of Banks, Norman Mataruka told the same Committee that the central bank was in talks with the Ministry of Finance and Economic Development to capitalise SMEDCO as it works to become a microfinance institution.
“It is necessary for SMEDCO to have the necessary information technology systems and infrastructure so that depositors’ funds are protected,” he said.
The central bank officials said banks were shying away from supporting SMEs as most of them were not formally registered.
Dr Dhliwayo said the RBZ was coming up with measures to ensure that banks increased their support for SMEs.
She said the banks required a “mindset change” when dealing with the sector as it was different from dealing with large companies which they were used to.
SMEs have become the biggest employment provider as formal companies have closed or scaled down operations due to a variety of economic challenges. — New Ziana
Online Reporter