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Senior Business Reporter
THE country’s export promotion agency, ZimTrade, says it has intensified its efforts to support Small to Medium Enterprises to become competitive in light of the envisaged stiff competition driven by the anticipated massive investments in the country.
Under the new political dispensation, the country has adopted the “Zimbabwe is open for business” policy, which is aimed at attracting foreign direct investment.
Since the coming in of the new political order in November last year, the country has approved over $7 billion in foreign direct investment compared to an average of $400 million per year in the past three years.
In an interview at the just ended Zimbabwe International Trade Fair in Bulawayo, ZimTrade board chairman, Mr Lance Jena, said his organisation through the Reserve Bank of Zimbabwe has successfully negotiated for an initial $100 million fund.
“We have an initial amount of $100 million that we have successfully negotiated with the Reserve Bank to support the growth and development of SMEs.
“As ZimTrade, we have been on a campaign to develop exports so that our SMEs are competitive in light of the envisaged competition to come through as a result of the massive foreign direct investments under the new dispensation,” he said.
“But we are not limited to supporting exporters to the level of $100 million and if there are viable export proposals we will support them to any level as long as they are viable and guarantee return into this country.”
Mr Jena said part of the funding would support SMEs in horticulture, manufacturing sector, fast moving consumer goods and women in business, among others.
“As long as the money is exhausted to support specific export operations, the Central Bank is prepared to inject more money to ensure they keep going.
“As ZimTrade we are doing one of our mandates of ensuring export development and one of the ways to do that is to ensure SMEs are well capitalised in light of the competition to come as a result of the expected massive investments under the new dispensation, ” he said.
Mr Jena said the export development fund was ready for disbursement at affordable interest rates of around 7.5 percent per annum.
He said RBZ has also made some headway in bringing in the Export Credit Guarantee Company of Zimbabwe, which would offer insurance as collateral against lending to SMEs. In the past, the banks were not willing to lend to SMEs due to lack of collateral security.
ZimTrade was also providing support to prospective borrowers by recommending to the bank but this was not a guarantee that they would secure the funding as due diligence procedures were being done by the respective financial institutions doing the disbursements.
“The banks will do the normal due diligence and when an SME qualifies, we are hoping that the collateral issue will be covered by the Export Credit Guarantee Company of Zimbabwe,” said Mr Jena.
Last year, ZimTrade signed agreements with respective banks to disburse the export facility to potential exporters in the SMEs sector. To stop banks from selling their own funds at the expense of the RBZ facility, the financial institutions are required to have disbursed certain amounts over a specific period.
At present, the country is facing foreign currency shortages due to subdued export receipts. Zimbabwe’s export performance last year increased by 30 percent to $3.5 billion.
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