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Oliver Kazunga, Senior Business Reporter

THE Reserve Bank of Zimbabwe (RBZ) has directed local financial institutions to increase support to micro, small and medium enterprises (MSMEs) to enhance financial inclusion.

Government has recognised the significant role played by the informal sector, particularly, the small-to-medium enterprises in anchoring the economy.

The MSMEs sector contributes over 60 percent to the Gross Domestic Product and employs more than 75 percent of the country’s total workforce.

 In his 2020 Monetary Policy Statement last week, RBZ Governor Dr John Mangudya said the monetary authority was keen to drive MSMEs through increased funding.

MSMEs require financial support in the form of working capital for retooling based on the fact that a number of them have antiquated machinery that works against economies of scale.

“Financial institutions are also expected to increase their support to the micro, small and medium enterprises (MSMEs) in order to deepen financial inclusion,” said Dr Mangudya.

“Support to the MSME sector has the potential to promote value addition to the key sectors of the economy through diversification, export earnings and import substitution, which are all critical for increased economic output.”

He said implementation of the Collateral Registry, for instance, was expected by June this year and the register would enable the MSMEs to leverage on their movable assets to access funding from formal financial institutions.

“In this regard, banking institutions and microfinance institutions are required to submit to the bank detailed strategies to support the productive sector during the period 2020-2021. The strategy document should be submitted to the bank by 30 June 2020,” said the RBZ boss.

As part of a broader scope in support of MSMEs, Government and the Procurement Regulatory Authority of Zimbabwe (PRAZ) are set to roll out campaigns to conscientise players in the sector about procurement regulations, which provide for 25 percent of any national tenders to the MSMEs.

Women’s Affairs, Community, Small and Medium Enterprises Development Minister, Dr Sithembiso Nyoni recently said despite forming the majority of economic players in the country, MSMEs tend to be left behind on national procurement tenders. 

Minister Nyoni said MSMEs should make sure that 25 percent of the national procurement projects were given to them and if not, they should appeal as the law requires them to participate. To ensure that entrepreneurs in the sector secure national tenders, the Government has initiatives meant to encourage the informal sector to formalise their operations. Formalisation of the informal sector has been identified as a key growth and brand creation, which upholds MSMEs to curb corrupt tendencies by business enterprises. — @okazunga