The government last week admitted it was not doing enough to support small-to-medium scale enterprises despite their significant contribution to the gross domestic product.
Finance permanent secretary Willard Manungo told a parliamentary committee for small-to-medium enterprises there was a need for the government to do more to increase the level of contribution for the SME sector.
“We are not doing justice compared to what the sector is contributing to the economy,” said Manungo.
“We really need to do more if we’re going to realise the potential of SMEs.”
He said the SME sector has been recognised for being critical to the development of the country and there were a number of institutions set up to assist it.
Manungo said the government was also working with the Mines ministry to address challenges faced by SMEs regarding new mining fees.
“We will be having consultations so that we don’t stifle the participation of SMEs. We have received their challenges regarding mining fees and we will be consulting with the Ministry of Mines,” he said.
Manungo said SMEs were failing to access cheap financing due to a big mismatch between deposits rates and lending rates.
He said the government was trying to address these disparities.
He said interest rates charged by microfinance institutions of around 30% per month were crippling SME operations.
“Thirty percent interest for SMEs is not acceptable,” said Manungo.
He said the government should tighten the regulatory environment to instill discipline.