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Marvelous Moyo Gwanda Correspondent
MICRO-FINANCE institutions (MFIs) should reduce their lending rates to promote the growth and development of small to medium enterprises, an official has said.

Matabeleland South Chamber of Small to Medium Enterprises provincial chairperson Denny Nyathi said this in an interview on the sidelines of a meeting in Gwanda on Thursday.

The meeting, which was attended by representatives of small to medium enterprises (SMEs) was organised by the Zimbabwe Association of Microfinance Institutions (Zamfi).

“MFIs aren’t helping, promoting, or developing SMEs because of their interest rates which are very high. Pegging lending rates at between 20 percent and 30 percent isn’t healthy for SMEs at all.

“Instead of being supportive to SMEs growth potential, some of the financial institutions are turning to be pawn brokers.

“And that’s hindering growth of small businesses because the lending rates are excessive,” he said.

He said lack of funding was a major challenge being faced by the SMEs sector adding that MFIs play a key role in unlocking access to funding for small enterprises.

Of late, a number of SMEs have not been able to access funding from banks.

Against this background, MFIs have become the source of credit lines for SMEs.

Nyathi said MFIs needed to strengthen the leading role which they were playing in supporting SMEs’ activities by reducing the lending rates.

“MFIs are yet to play their role in alleviating of poverty because people are still working for food and no infrastructure development is taking place.”

He said despite the efforts to promote local procurement by the government through concepts such as the Buy Zimbabwe Campaign, locally manufactured products were bound to remain expensive and uncompetitive compared to imports.

The Zimbabwe Microfinance Wholesale Facility Trust managing director Brian Zimunhu said high interest rates being charged by MFIs were as a result of the challenges they were facing.

“We’re very aware as to why MFIs charge high interest rates. And as a funder, we’re working hard to boost their portfolios,” he said.

Zamfi executive director Godfrey Chitambo said low lending rates to rural communities would foster the development of small enterprises.