Authorities have observed that lack of capacity and limited access to finance continues deterring operations and growth of small and medium enterprises in the country.
This was revealed at a sensitisation meeting for trade and agribusiness officers from various districts in the north under the Financial Inclusion and Entrepreneurship scaling (FInES) Project.
Speaking to MIJ Online, Richard Zidana FInES project’s Business Development Specialist said current loan conditions being offered by financial institutions do not favour SME’s therefore limiting their access to finances that can further the growth of their businesses.
Apart from access to loans, Zidana further observed that most SMEs fail to properly prepare and produce documents which are required when applying for loans therefore limiting their chances of being offered loans by money lending institutions.
“The common problem among SMEs is producing a sound business plan which is to be presented to financial lending institutions when applying for loans and most SMEs do not know what to being to the table when applying for loans hence our initiative to give them that capacity” said Zidana.
Meanwhile, Zidana, has further disclosed that through the FInES project, SMEs will have access to loans with soft interest of less than 11 percent with which to use in growing their businesses.
“In normal circumstances, banks are lending at about 31 percent but in this project, SMEs have the chance of getting loans with an interest of less than 11 percent and it is our hope that this will facilitate growth of their businesses.” Zidana said.
Concurring with Kachiwaya is Grey Van der Hoff leader of the IBF team who are implementors of the FInES project who said access to market, finance and inadequate business management skills are some key factors derailing the growth of SMEs.
However, Van der Hoff is still optimistic of improved operations of SMEs saying the aforementioned challenges will be addressed through the projects loan package as well capacity building initiatives.
Meanwhile, government through the ministry of trade and industry has pledged its commitment to support the growth of SMEs by among others establishing a database of all small and medium-scale enterprises.
Limbikani Kachiwaya Director of Small and Medium Enterprises and Cooperatives in the Ministry of Trade and Industry said the database will also ensure easy access to information on business loan application process, business registration as well as access to markets by SMEs.
According to Kachiwaya government has further established the SMEs policy and it is in consultation with the ministry of justice to finalise the formulation of SME Bill to ensure that SMEs operate within the detects of the law.
“We just don’t want to give SMEs money and leave them without any protection, as a ministry we want to create a platform that ensures their protection as well as promote their ease access to information” explained Kachiwaya.
The FInES project is an 86 million US dollar project aimed at increasing access to financial services, promote entrepreneurship and capabilities of Micro, Small and Medium Scale Enterprises.
