Harare – The Zimbabwe Association of Microfinance Institutions (Zamfi) says small and medium scale enterprises (SMEs) require strategic guidance and financial support to be able to play a bigger and effective role in driving the economy.
Described by Finance and Economic Development Minister Patrick Chinamasa as the “new economy,” the largely informal SMEs sector has become the bedrock of the Zimbabwean economy in providing employment, creating more jobs than the shrinking formal sector.
However, failure to contribute revenue to a struggling fiscus remains its major ill.
Zamfi board chairman Patrick Mangwendeza told New Ziana the sector “has been very brave” in the past few years but it remains on shaky ground due to lack of support and guidance.
“We take full cognizance of the belief that the SME sector is the engine for growth. It is our ardent wish that this sector be fueled enough for it to play its role,” he said.
“For the past few years, although it has been a very brave sector, it seemed as if it was doddering between the hospital and the actual intensive care unit and the doctors were slow in assisting with the medication which is funding, technological up scaling, competitive products and foreign markets among others,” he said.
While microfinance institutions are also battling prevailing liquidity challenges, Mangwendeza said the entities, which have been the major funders of SMEs in the absence of support from commercial banks, were ready to provide more support to the sector.
A recent study the Bankers Association of Zimbabwe commissioned found that lack of funding was the biggest handicap for SMEs and urged the financial institutions to adopt a new approach of dealing with the sector.
The study also found that the informal sector also suffers from negative perception with players considered as high risk as some of their activities are perceived as illegal in nature.
Meanwhile, Mangwendeza was optimistic current efforts by Government to stimulate economic growth as well as attempts by the Reserve Bank of Zimbabwe to stabilise the financial sector would benefit SMEs this year.
“Monetary stability which is key to the performance of the whole financial sector which includes microfinance, is likely to record significant improvements due to a number of noble intervention strategies that have already been indicated by the monetary authorities in their recent policy pronouncements,” he said.
Some of measures announced include introduction of the interbank money market, setting up of national credit reference department, recapitalisation of the central bank and creation of the Zimbabwe Asset Management Company, which is buying non-performing loans from the banks.
Mangwendeza said Government efforts to normalise relations with the West, clarification of indigenisation laws and implementation of deals signed with the Chinese and the Russians among other investors would also drive economic growth for the benefit of the whole economy including the microfinance sector. – New Ziana.