ECGC rolls out US$60m credit guarantees

ECGC credit analyst Moses Taru

THE Export Credit Guarantee Corporation of Zimbabwe (ECGC) says targeting to distribute US$60 million to 200 SMEs through its micro, small and medium-sized enterprises (MSMEs) credit guarantee scheme.

ECGC, which is a subsidiary of the Reserve Bank of Zimbabwe, seeks to bridge the financing gap between small enterprises and lenders.

Information gathered by businessdigest showed that as at half year 2023, ECGC availed US$34,5 million to 87 small to medium scale enterprises (SMEs), while last year the number of guarantees issued stood at 91 with a value of US$6,95 million.

This is coming as SMEs have been facing challenges in accessing credit facilities from banks due to lack of collateral.

ECGC credit analyst Moses Taru told businessdigest on the sidelines of the Zimbabwe Association of Microfinance Institutions (ZAMFI) winter school in Nyanga recently that SMEs have been driving the economy.

“The number of guarantees issued (MSME and financial guarantees) stood at US$34,5 million by half year 2023,” Taru said.

The MSME credit guarantee scheme was introduced in 2018, targeting SMEs and individual entrepreneurs facing challenges in accessing credit facilities.

Over 700 SMEs have benefited from the initiative.

“Through this scheme, ECGC is trying to bridge the finance gap between SMEs and lending institutions. We are targeting all sectors from agriculture, manufacturing, transport, tourism to mining and retail,” he said.

“As ECGC, we are saying, if someone is running a viable business, they should not be denied access to finance because of lack of collateral because ECGC is closing that gap through the MSME credit guarantee scheme.”

Taru said through the MSME credit guarantee scheme, microfinance institutions were now able to assist SMEs with loans at the back of its guarantee.

Before this initiative, he said microfinance institutions used to hesitate to extend credit facilities to SMEs without collateral fearing the risk of default.

“With our credit guarantee in place, they are able to do so knowing they have a strong fall-back position in case of a default. MSMEs have been identified as foundational for inclusive economic growth and an important catalyst for the turnaround of Zimbabwe’s economy,” Taru said.

“Despite bearing such a critical role, MSMEs were being deprived of the chance to perform to full potential as they continue to be denied access to credit facilities from lending institutions due to perceived high risk and lack of collateral.

“It is against this background that in 2018, Export Credit Guarantee Corporation of Zimbabwe (Pvt) Ltd, in collaboration with the Reserve Bank of Zimbabwe, established the MSME credit guarantee scheme.

“The main objective of the guarantee is to facilitate access to finance for SMEs and individuals with bankable projects without the lack of collateral being a hindrance,” he added.

ECGC is a short-term insurance company established as the national export credit agency with a core mandate of facilitating international trade through the issuance of export credit insurance to Zimbabwean exporters.

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