Online Reporter
Nelson Gahadza, Zimpapers Business Hub
The National Venture Capital Company of Zimbabwe (NVCCZ) says small to medium enterprises (SMEs) need to build investor trust through strong governance, financial transparency and scalable business models to unlock funding opportunities in the capital markets.
NVCCZ is a Government initiative aimed at supporting startups and early-stage businesses by providing patient capital, mentorship and strategic guidance, thereby addressing funding gaps and promoting innovation across various sectors.
NVCCZ chief executive Mr Tinotenda Kambasha, speaking recently at a Securities and Exchange Commission of Zimbabwe (SecZim) webinar on unlocking funding opportunities for SMEs through the capital market, said key requirements for SMEs to attract investors included accurate and up-to-date financial record-keeping.
“Others include strong corporate governance structures, scalable and repeatable business models, a clear growth strategy and exit potential,” he said.
Mr Kambasha said SMEs should avoid over-leveraging or shareholder dilution and retain equity for strategic partnerships.
“The projects should demonstrate high growth potential, which can be nurtured into a commercial business and also demonstrate that the technology or business should be able to scale up to match emerging market trends, increased demand and growth without compromising its performance and without huge additional costs,” he said.
The NVCCZ has already partnered with ventures such as Kumba Care, a telemedicine platform; a tomato processing plant in collaboration with the National University of Science and Technology (Nust); and Equity Echoes, a platform promoting transparency in venture funding.
In Zimbabwe, the SMEs sector has huge capacity for employment creation and remains a vital cog in the industrialisation of the economy through primary production, value addition and beneficiation.
The sector accounts for more than 76 percent of employment in Zimbabwe, providing livelihoods for many people and alleviating poverty in communities.
Zimbabwe’s capital markets regulator, SecZim, recently said it has initiated discussions with the Government to have joint efforts to promote the participation of SMEs in the capital market.
The sector now dominates various sectors of the economy, such as retail and wholesale, mining and agriculture.
This has resulted in SecZim and the Zimbabwe Stock Exchange (ZSE) initiating steps to lure the sector into participating in capital markets, which will also improve their access to capital.
“As we look forward to the next chapter, we are excited about the prospects that we are exploring with our exchanges, which include the inclusion of Small to Medium Enterprises (SMEs) to access finance through our platforms,” said ZSE chief executive, Mr Justin Bgoni.
Speaking during the same webinar, Grace Berejena, SecZim director of policy and market development, said limited access to finance by SMEs worldwide remains as their greatest constraint on growth.
“However, capital markets have the potential to make a difference for SME access to finance,” she said.
She noted that limited participation in the capital market also remains a major impediment to utilisation of the capital market by SMEs.
