Zimbabwe’s second largest Mobile Network Operator (MNO), Netone has drawn up a programme to finance 500 Small-to-Medium Enterprises (SMEs) in a move meant to incentivize entrepreneurs to create profitable business ventures.
The programme will be bankrolled by a $71 million loan facility availed to the MNO by Zimbabwe’s long-time creditor, China Exim. The loan facility will perhaps disproportionately finance the upgrading and expansion of Netone’s infrastructure and the remaining amount is the one that’s going to be channeled to the SMEs project. About the programme, NetOne’s Chief Executive Officer Mr. Lazarus Muchenje said;
With regards to 500 small to medium enterprises, we are looking at covering most of the townships in the whole country where we are going to identify at least one….We are getting $71 million from the China Eximbank, which is facilitated by the Government of Zimbabwe…..So, we will work with these guys by giving them incentives on how to create business and we will work with them to find right business models
SMEs play a critical role in job creation and ultimately spur economic growth. According to a recent study from the International Finance Corporation, SMEs account for more than half of all formal jobs worldwide, and their share of aggregate employment is comparable to that of large firms.
Netone’s programme will surely help SME’s who are desperately in need of financing. Financing is one factor that’s inhibiting the growth of the SMEs factor in Zimbabwe. This is due to the perception banks and other financiers have, that financing Individuals and SMEs constitute a higher risk. The risk is ascribed to the fact that SMEs lack collateral which bankers insist on having if they are to give loans to SMEs.
In instances where SMEs do get the loans from banks the terms (which include interest rates) are usually very stringent. Because of this lack of access to finance from deposit-taking institutions SMEs end up borrowing from money lenders whose average interest rates are too heavy for any business cash flows to carry and hence put SMEs in unnecessary financial burden and distress.
When will the programme start?
SMEs who are expecting to get their hands on Netone’s funding will have to wait for at least two months as the MNO sort out its paperwork with the Ministry of Finance and Economic Planning.
……we are in the process of finalizing that and there are few documents that we need to go through and work with the Ministry of Finance and Economic Planning…..We believe in the next two, three months we should be looking at those funds flowing.”