MICROCAPITAL BRIEF: Zimbabwe Microfinance Bill Would Seek to Benefit Small and Medium-Sized Enterprises (SMEs)

In July 2013, a bill to increase funding for small- and medium-sized enterprises (SMEs) was proposed in the Parliament of Zimbabwe. The bill aims to mitigate the challenges SMEs reportedly face in accessing funding due to a lack of collateral, a deficit of adequate financial records and high interest rates charged by banks [1]. One of the bill provisions calls for a minimum capital requirement of USD 5 million for MFIs that service SMEs beginning in December 2013. If passed, the bill will also task the Reserve Bank of Zimbabwe, the country’s central bank, with the licensing and supervision of credit-only and deposit-taking institutions.

According to Dr Kupukile Mlambo, the Deputy Governor of the country’s central banking authority, the Bank of Zimbabwe, only 18 percent of SMEs in Zimbabwe have access to formal financial services [1]. As a result, greater regulatory measures, policies that foster financial stability and consumer protection reportedly are becoming increasingly necessary to promote greater access to financial services for SMEs. Technology, such as mobile and internet banking, is also endorsed as a strategy to enable greater financial access for SMEs. Currently, Zimbabwe’s Ministry of Small and Medium Enterprise Development functions to formulate and implement SME-related policies that aim to increase in Zimbabwe’s employment and economic growth [2].

By Anesa Kratovac, Research Associate

Additional Sources and Resources:

[1] All Africa online article, July 18, 2013, “Zimbabwe: Microfinance Bill to Benefit SMEs,” http://allafrica.com/stories/201307180290.html

[2] Official Zimbabwe Government website of the Ministry of Small and Medium Enterprise Development, http://www.gta.gov.zw/index.php?option=com_content&view=article&id=66&Itemid=121

MicroCapital.com Article, March 13, 2013, “MICROCAPITAL BRIEF: Deputy Prime Minister Mutambara of Zimbabwe Urges Banks to Stop Seeking Legal Action Against Econet’s Ecocash Mobile Banking Service and Start Competing,” https://www.microcapital.org/microcapital-brief-deputy-prime-minister-mutambara-of-zimbabwe-urges-banks-to-stop-seeking-legal-action-against-econets-ecocash-mobile-banking-service-and-start-competing/

MicroCapital.com Article, January 10, 2013, “MICROCAPITAL BRIEF: Zimbabwean Government’s Small Enterprises Development Corporation (SEDCO) Looking to Collect Microsavings to Bailout Itself,” https://www.microcapital.org/microcapital-brief-zimbabwean-governments-small-enterprises-development-corporation-sedco-looking-to-collect-microsavings-to-bailout-itself/

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