{{Zimbabwe will host its first ever micro-small and medium enterprise banking and microfinance summit on July 17 2013 to discuss ways to resolve factors constraining SMEs growth.}}
While they remain at the periphery of central economic planning and policy, considering the little support they get, MSMEs have become, arguably, Zimbabwe’s biggest employer.
MSMEs in Zimbabwe definitely generate billions of dollars worth of goods annually, which if properly accounted for would hugely inflate the country’s US$10 billion GDP.
Their potential for growth is caught up in an intricate web of administrative bottlenecks and economic environment challenges chief among them access to finance.
“Lowering these barriers to access and offering suitable financial products can allow households and small businesses to maximise the leverage of their savings or earnings for increased productivity, contributing to higher incomes, job creation and, ultimately, growth,” said event organisers Deat Capital managing director Nicky Moyo.
Some of the dignitaries expected to attend the summit include Reserve Bank of Zimbabwe Governor Dr Gideon Gono, Bankers’ Association of Zimbabwe president Mr George Guvamatanga, Professor Gerhard Coetzee, director of the Centre for Inclusive Banking, University of Pretoria, Mr Mutsa Chironga associate principal, sub-Saharan Africa, McKinsey and Company and Mr Kamal Budhabhatti chief executive officer, Craft Silicon,Kenya.
The emerging market Micro, Small and Medium Enterprise banking opportunity is large and growing fast.
According to McKinsey and Company, MSME banking is expected to grow to more than US$350 billion by 2015, which is approximately US$220 billion larger than in 2010.
Micro, Small and Medium Enterprises in Zimbabwe play a vital role in economic development, by increasing competition, fostering innovation and generating employment.
In Africa, and Zimbabwe in particular, as in many other developing and transition economies, SMEs employ the largest percentage of workers.
However, in Africa and Zimbabwe, these enterprises’ contribution to GDP is significantly lower than anywhere else in the world: while they contribute to up to 50 percent of GDP for high-income countries, the percentage in Africa remains below 10 percent for various reasons.
MSMEs on the African continent face several challenges to growth, ranging from unfavourable macroeconomic environments to administrative barriers and red tape.
Perhaps the biggest obstacle, however, remains their limited ability to access financial services due to lack of collateral and special arrangement to enhance access to finance.
Additionally less than 20 percent of households in Zimbabwe have access to formal financial services, with low population densities, poor transport and limited communications infrastructure contributing to a lack of supply in extensive regions of the continent.
Even where such services are available, low-income individuals and small and medium businesses may have difficulty in meeting eligibility criteria such as strict documentation requirements or the ability to provide collateral.
Those able to meet such demands may find they are still excluded from formal financial services by cost barriers, in the form of high transaction fees or substantial minimum requirements for savings balances or loan amounts.
{Herald}
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