Zimbabwe: Wholesale Funding Scheme Launched
Washington DC, US, December, 15 2011 -
CBZ Bank and the Zimbabwe Microfinance Wholesale Trust have launched a wholesale funding scheme to financial service providers for on lending to small-scale enterprises. The funding scheme is expected to give impetus to the small and medium enterprises to recapitalise their operations.
In a joint statement yesterday, CBZ and ZMWFT said the wholesale loans would be tailor-made to the specific risks and circumstances of each qualifying organisation.
The loan size ranges from US$1 000 to a ceiling of US$50 000.
Wholesale funding is where big financial institutions like CBZ Bank source funds and parcel them to micro finance institutions for lending to different beneficiaries.
This facility has created activity for micro-financiers, who have been struggling with liquidity and with the wholesale funding, they would now be in a position to grow their loan books.
Small and medium enterprises have scaled down their businesses due to serious liquidity challenges. The sector also finds it difficult to access loans from financial institutions due to lack of security.
Requirements of the application also help to try and tap into the US$2,5 billion that is estimated to be circulating outside the formal banking system.
If SMEs access funding through normal banking channels they have to pay back the money through the same system thus utilising banking facilities.
Wholesale funding help big financial institutions to deal with administrative issues on smaller loans especially coming from small businesses.
This facility comes after the Infrastructure Development Bank has secured a US$30 million facility for small and medium-sized businesses from the Development Bank of China.
This is a dual tranche facility with the first of US$10 million earmarked for capital expenditure while the second tranche of US$20 million will be for working capital. The facility attracts a 10 percent interest.
The capital expenditure portion has a tenor of five years while the working capital package will mature after one year.
IDBZ said the facility would be open to all companies operating in Zimbabwe with particular emphasis on small and medium-sized enterprises.