Vice President Phelekezela Mphoko has implored banks to lower interest rates to enable small and medium enterprises to access cheap loans as they seek to revitalize the economy.
Speaking at the official launch of a $10-million small-to-medium enterprise national loan facility in Bulawayo at the weekend, Mphoko said high interest rates are perpetuating the liquidity crunch that has seen most businesses failing to access capital.
Under the loan facility, being availed by the Commercial Bank of Zimbabwe (CBZ), individuals or companies can get loans of up to $200,000, with a maximum repayment period of 24 months for capital projects and 12 months for working capital.
Bank officials could, however, not immediately say how much interest would be charged on the loans.
The vice president said although the loan facility was national, businesspeople in Bulawayo and the surrounding areas should take advantage and grow their small-to-medium enterprises to help revitalise the regional economy.
He said, “Bulawayo will be developed by you who live in Bulawayo. A person from Murehwa will prioritise developing his home area, and a person from Binga will do the same. So, you who are from Bulawayo must also think of Bulawayo first.
“When there is such a fund which is available to everyone in the country who is eligible, all of you here who are from Bulawayo must ensure that you access that money so that you can help develop your area.”
The facility is part of a US$46 million loan which the CBZ received from PTA Bank earlier this year.
Divisional director Molly Dingani of the CBZ’s Business Banking Division said her bank made the facility available because it recognises the important role that small to medium entities play in the economy.
Dingani said, “Having noted the importance of the sector, the bank decided to form a specific division late last year, which is looking at micro and small-to-medium enterprises, specifically to look at the kind of products that we can provide for the sector in order to take care of its business financial requirements.”
Small-to-Medium Enterprises Development Minister, Sithembiso Nyoni, who was also at the event, urged those in business as well as aspiring business people to be proactive, saying that they should not blame other people for their failures.
Nyoni said, “We stand ready to work with the banking industry to jointly promote the development of SMEs. My ministry will continue supporting financial institutions and my ministry will continue to support SMEs. Like I said, we are there for you, but you are the beginning and the end of your own businesses.
“Time for blaming other people has passed. This is the time to take responsibility; after you have taken responsibility, here is a facility to support you.”
Economist Prosper Chitambara of the Labour Economics and Development Research Institute of Zimbabwe acknowledged the importance of small-to-medium enterprises in driving the growth of the economy and pointed to the example of countries like China, India, and South Korea whose economies have grown rapidly on the back of such businesses.
Chitambara said the absence of adequate support by the government, coupled with other impediments like lack of requisite business skills and capital, have stifled the growth of small-to-medium enterprises in Zimbabwe.
As the country’s economic crisis continues, the formal sector keeps dwindling, with the informal sector and small-to-medium enterprises now providing sustenance to millions of unemployed Zimbabweans.
Meanwhile, Vice president Emmerson Mnangagwa at the weekend also commissioned the 42-kilometre Mtshabezi Water Pipeline which brings water to Mzingwane Dam, one of Bulawayo’s main water sources.
The $24-million project, which was started in 2007 and completed in 2013, could not be commissioned as a result of political bickering between Zanu PF and the MDC-T during the inclusive government, with the then Water Resources Minister Samuel Sipepa Nkomo at one time being blocked from officially launching the project by suspected Zanu PF supporters and war veterans.
Water and Climate Minister Oppah Muchinguri Kashiri said the project would help ease Bulawayo’s perennial water problems.
The pipeline brings 17,000 cubic litres of water, nearly 20 percent of Bulawayo’s water requirements.