Zimbabwe: Govt Avails $10m Treasury Bills for SME Banks

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Dec 2016
Zimbabwe, December, 07 2016 - The Government will issue Treasury Bills valued at $10 million to capitalise the Small to Medium Enterprises (SMEs) microfinance bank as part of measures to support growth of young businesses.

President Mugabe said this in Parliament yesterday during the State of the Nation Address in Parliament.

“The Small and Medium Enterprises and Co-operative Development Ministry plays a vital role in the growth of our country’s economy.

Government capacitates the sector through training, infrastructure provision, marketing and the creation of the entrepreneurship development,” said the President.

“In order to improve access to finance by SMEs and co-operatives, Government approved the establishment of a microfinance bank under the Small to Medium Enterprises Development Corporation. The bank will be capitalised through the issuance of Treasury Bills valued at $10 million.”

In the 2016 monetary policy statement, Reserve Bank of Zimbabwe Governor Dr John Mangudya highlighted that the microfinance bank would be required to identify clusters within the SME and co-operatives cluster that can be nurtured throughout the country.

The setting up of the microfinance bank is expected to go a long way in alleviating financial challenges SMEs have been facing.

Despite their critical role in economic development, SMEs in the past have failed to access funding from the banking sector due to tight collateral requirements.

As a result of lack of financial support, SME operations have been hamstrung.

Due to the prevailing economic climate, businesses in the formal sector have either scaled down or closed, leaving thousands of people unemployed.

Against this background, the SMEs contribute close to 60 percent of employment in Zimbabwe.

Players such as the Zimbabwe Association of Microfinance Institutions has said the SMEs sector require strategic guidance and financial support to be able to play a bigger and effective role in driving the economy.

An estimated $5 billion is believed to be circulating within the informal sector and the Government last year announced plans to formalise SMEs operations to tap into the sector.



Source : The Chronicle
 

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