CBZ unveils $10m SMEs facility

HARARE - Zimbabwe's largest financial services group by asset base, CBZ Holdings (CBZ), has unveiled a $10 million facility to stimulate and support growth in the small-to-medium enterprises (SMEs) and micro finance sectors.

Its chief executive, Never Nyemudzo, told businessdaily yesterday that the fund — to be administered by CBZ’s recently established Business Banking Division — would be earmarked for SMEs in various sectors of the economy.

“We are quite very excited by our approach to the SMEs sector where things are happening,” he said, adding that the three-year loan facility will help inject fresh liquidity into the economy.

Nyemudzo said the loans, ranging up to $100 000 per project, will attract an interest rate of between six and 12 percent.

This comes as the SMEs sector has become a hub of employment in the country where massive company closures in the past four years have seen hundreds of thousands of workers being retrenched due to low aggregate demand.

A recent report by the Junior Chamber International revealed that SMEs are estimated to be contributing 40 percent of the country’s total gross domestic product (GDP) as the economy continues to regress without solution in sight.

Various sources indicate that an estimated 5,7 million people — out of Zimbabwe’s 13 million population —were employed in the informal sector where an estimated turnover standing of $7,4 billion circulates.

However, most SMEs have found it difficult to flourish in the current harsh economic environment due to lack of financial management and limited access to finance from formal sectors.

Nyemudzo said CBZ, with an asset base of over $1,2 billion, has come up with a comprehensive training programme aimed at supporting SMEs to spur economic growth.

“Our approach is to look at all the sectors where SMEs are involved such as agriculture, poultry and manufacturing and provide funding to them,” he said.

Although government has conceded that the old economy was dead and a new one had been born, urging financial institutions to support small-to-medium-sized enterprises, banks continue to shun this important sector due to lack of collateral.

The CBZ boss said to overcome the collateral challenge, his institution has devised an insurance scheme to cater for up-starting SMEs to cover various risks such as death.

“The bank has put in place an insurance package which the SMEs can then take and cover or use as collateral for the loans that they are going to access. We see this as a major boost to most SMEs without collateral,” he said.

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