HARARE, October 27 (The Source) – Small to medium enterprise (SMEs) will be allowed to use movable assets as surety to increase access to funding under a new policy, vice president Emmerson Mnangagwa said on Thursday.
Mnangagwa said SMEs make up 70 percent of Zimbabwe’s economic activity and contribute more than 50 percent to the gross domestic product but continue to face challenges when accessing financing from banks which only consider immovable property as collateral.
“The Reserve Bank of Zimbabwe (RBZ) is working towards addressing the issue of collateral for SMEs, which will now include moveable assets as collateral to promote financial inclusion of this key sector of our economy,” said Mnangagwa while addressing an SMEs exhibition.
In May, the RBZ reported that $154 million of banking loans went to SMEs in the first two months of the year.
Mnangagwa said banks and financial institutions shun funding SMEs because they lack proper registration, business management skills and appropriate technology, which has constrained the growth of the sector.
“Unregistered SMEs continue to lose out on 25 percent tender value issued by the government. SMEs need to formalise their operations and be registered, which will allow them to do business with other companies and attract both local and foreign investors.”
It is estimated that between $3 billion and $7 billion is circulating in the informal sector.