Source: SMEs formalisation key to unlocking funding – NewsDay Zimbabwe June 28, 2017
Small and Medium-Scale Enterprises (SMEs) should work in harmony with the government to register and formalise, as this will enhance their credibility in accessing loans from financial institutions, Small and Medium Enterprises deputy minister, Noveti Muponora has said.
By Tinotenda Munyukwi
Speaking on the sidelines of an SMEs Banking and Microfinance Summit organised by DEAT Capital in Harare yesterday, Muponora called for co-operation from all SMEs to address the challenges they face in acquiring funds from financial institutions, including a $90 million National Financial Inclusion Strategy provided by the Reserve Bank in May.
“The formalisation process will help the SMEs themselves because, for instance, we are talking of $90 million dollars from RBZ which is a lot of money. But because most of our SMEs are in the informal sector, they cannot access that fund. Some of the funding is being accessed through Agribank and an SME without a bank account cannot access that money,” Muponora said.
“As government we are working on the formalisation strategy of all SMEs and we are almost there. The problem with the strategies that we have been seeing from other countries is that there are no incentives to ensure that they can formalise, but we have been working with all stakeholders including the police, Zimra and financial sectors to ensure that they formalise.”
He also said that formalisation of SMEs had positive effects on the country’s gross domestic product (GDP), while highlighting that the government was in the process of formulating strategies that would make SMEs’ registration efficient.
“Right now the government is seized with the issue of ease of doing business and we are cutting the number of days that we used to take to register a company and are also advocating as a ministry for the reduction of money needed to register a company,” Muponora said.
Most SMEs remain hesitant to formalise their operations with many fearing the requirement to meet tax obligations which would accompany formal registration processes. However, most Macro and Micro financial institutions are refusing to offer loans to small businesses without a clear traceable record.