Govt to disburse $7,6m to rural SMEs

Source: Govt to disburse $7,6m to rural SMEs – Sunday News May 21, 2017

Dumisani Nsingo, Senior Business Reporter
THE Ministry of Small and Medium Enterprises and Co-operative Development will soon start disbursing $7,6 million to Savings and Credit Co-operatives (Saccos) in selected rural areas as part of improving their businesses.

Small and Medium and Co-operative Development Minister Sithembiso Nyoni said the disbursement of the $7,6 million funding sourced from the Organisation of the Petroleum Exporting Countries (OPEC) to beneficiaries would begin after training of savings and credit co-operatives members on how they can maximise on their businesses.

A loan agreement between the Government and OPEC Fund for the International Development relating to a US$7,6 million line of credit to support the Poverty Alleviation Project in three provinces, namely Masvingo, Manicaland and Matabeleland North was signed on 17 August 2016.

“The OPEC (funding) was passed in Parliament and now it’s rolling on and my ministry is going to each of the provinces where OPEC is, that’s Matabeleland North, Manicaland and Masvingo.

“We will first train our staff and after that we will train the Saccos-people that will have come to participate in this programme and then they will get applications and benefit from the programme,” said Minister Nyoni.

Major challenges that have affected the growth of Saccos are lack of knowledge on how to run the different organisations and also on how to perpetuate their savings.

A Sacco is a democratic, unique member-driven, self-help co-operative. It is owned, governed and managed by its members who have the same common bond, for example working for the same employer or belonging to the same church.

The members agree to save their money together in the Sacco and to make loans to each other at reasonable rates of interest.

“The funding will definitely benefit rural communities in the sense that it fosters unity, through Saccos, it helps people to save. It starts from $10 000 per group up to $50 000 depending on the levels they want to operate and the loan will be payable over a year,” said Minister Nyoni.

Zimbabwe Chamber of SMEs secretary-general Mr Rabson Hove said the distribution of the OPEC fund to Saccos in remote areas of the country was a noble idea because over the years rural communities have been overlooked in accessing various Government initiated funding and financial schemes.

“The funding of rural Saccos is a very noble idea because it promotes financial inclusion because rural communities have been marginalised for some time. If there is such a facility earmarked for rural areas we definitely encourage it because most of them were previously meant for urban dwellers and the rural people usually faced challenges to access them due to lack of collateral as most don’t have title deed. Funding rural Saccos will add value to rural SMEs,” said Mr Hove.

Small and Medium Enterprises Association of Zimbabwe (SMEAZ) chairman Mr Farai Mutambanengwe said funding of Saccos would assist them to increase on their lending capabilities.

“It (funding) will mean that there will be more money available for the Saccos for on landing but as I have said I haven’t heard about this particular facility. The only facilities that have been announced to us are targeted at particular SMEs,” said Mr Mutambanengwe.

SMEAZ is on record saying Zimbabwe’s banking sector is dominated by commercial banks, and to date no Micro Finance Bank has been established.

Though most commercial banks have SME divisions, small businesses have complained that they use an extension of the products and rules applied to large corporations, demand collateral security in the form of title deeds for immovable property, which most SMEs do not have.

The small-to-medium scale enterprises continue to make a substantial impact on Zimbabwe’s mainstream economy despite a myriad of challenges.

Financial constraints, poor marketing and promotion have affected the sector that has the potential to create thousands of jobs.