HomeBusinessSedco to disburse $5m to SMEs

Sedco to disburse $5m to SMEs

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THE Small and Medium Enterprises Development Corporation (Sedco) could disburse loans totalling $5 million this year to support small-to-medium scale enterprises.

TARISAI MANDIZHA
BUSINESS REPORTER

Sedco last year disbursed $600 000 after failing to get budgetary support and lines credit hampering the development of SMES.

This will come at a time the economy has gone informal due to the closure of companies citing the harsh operating environment. Sedco is a public enterprise under the Small and Medium Enterprise and Co-operative Development ministry.

Sedco general manager Gladys Kanyongo told NewsDay that the $5 million would be raised from lines of credit and budgetary support.
“This is subject to receipt of a line of credit of $3 million and budgetary allocation of $1,9 million under the 2015 Budget among other resource mobilisation efforts,” she said.

Sedco last year disbursed loans to 200 micro and small enterprises and 60 members from four co-operatives.

The interest rate was 15% per annum.

Kanyongo said the corporation was facing challenges of information asymmetry as most micro, small and medium enterprises may not be able to provide adequate financial information to assist in making lending decisions.

She also said other challenges were security or collateral as some of the potential beneficiaries may not have adequate security to secure the loans.

Kanyongo said there was also a diversion of funds since there was no separation of personal and business funds by some entrepreneurs and that these challenges among other factors led to high non-performing loans and delinquency.

Kanyongo said the Sedco mandate covered the micro, small and medium enterprises as well as co-operatives. These cut across all sectors of the economy.

She added that Sedco intended to mobilise additional lines of credit to ensure that major the challenge of access to finance by SME’S was addressed.

“Access to finance will be coupled with business training to improve the beneficiaries’ of the corporation loans financial literacy among business skills.

“The corporation will play its part in financial inclusion by ensuring that its beneficiary clients use financial services not just for borrowing, but also for transacting as well as other complimentary financial products for their business. The corporation is working with other stakeholders in the transition of SMEs in the informal sector into the formal economy,” she said.

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