Michael Tome Business Reporter
LOCAL entrepreneurs must make full use of the various Government-supported funding schemes to improve and grow their budding businesses, a senior Government official has said.
The funding options include the National Venture Capital Fund (NCVF) and funding schemes provided by institutions like Empower Bank, Zimbabwe Women’s Microfinance Bank (ZWMB), and the Small and Medium Enterprises Development Corporation (SMEDCO).
The NVCF was established to assist start-ups and other small firms to access working capital and funding for technology improvement among others.
A venture capital fund is a type of investment finance that provides capital to startup companies and small businesses that have high growth potential. The funds typically operate by pooling money from various investors, such as institutional investors, wealthy individuals, and pension funds, and use this capital to invest in early-stage or high-growth companies.
Venture capital funds typically invest in companies that are in their early stages and are considered high-risk investments.
In 2020, the Government established the NVCCZ in pursuit of economic transformation and value addition, which was capitalised to the tune of $1 billion by the end of last year.
To that end, ZWMB, which was established six years ago, has extended loans to at least 115 000 individuals with 53 percent of the funds given for trade and services while the balance mostly went to supporting agriculture.
Another microfinance institution, Empowerbank was established with the objective to provide financial solutions to the financially excluded population, focusing mainly on the youths. The bank strives to empower marginalised communities, small businesses to upscale through wealth creation projects and to generate better employment opportunities.
Hitherto the microfinance institution has managed to approve loan applications from a number of sectors of the economy, but mainly dominated by agriculture given less sophistication of agribusiness. The other significant chunk of loans has been disbursed to youths in SME ventures encompassing transport, distribution, and retail sectors. While addressing delegates at the entrepreneurs networking dinner hosted by “Financial Fitness Health Centre” in Harare, Finance, Economic Development and Investment Promotion Deputy Minister, David Mnangagwa said the government had come up with mechanisms to ensure that grassroots projects are supported.
The deputy minister added that those in need of the funds were not able to reach the funding, probably due to information asymmetry.
“Government has youth-centric policies but entrepreneurs have been disconnected from the system because of certain views and policies but I am saying this is the time to leverage, there are funds that revolve around youth and can be accessed from Government institutions like SMEDCO, and Empowerbank.
“As a Ministry, we also have a venture capital fund, which is part of a private equity fund, to fund young entrepreneurs who have brilliant ideas and bring them to fruition. This probably has not been communicated or advertised as much as it should, but at a very basic level there is actually a fund to finance entrepreneurs’ endeavors, it is there on the budget.
“Trust your government, approach it because we are supposed to work together to make sure that we grow millionaires, be complementary,” said Deputy Minister Mnangagwa.
He added that there were various finance schemes available through developmental partners like African Development Bank, Development Bank of Southern Africa, and Africa Finance Corporation.
“We have developmental partners who are willing to fund private sector projects. Your East Africans and West Africans are creaming it from some of these institutions that we are actually subscription members to. We can leverage these institutions to raise financing. Our part as Government is to come in and keep necessary guarantees.”
Speaking to delegates at the event, ZWMB head of risk management, Dr Axilia Chikava lauded the Government for coming up with initiatives that support budding entrepreneurs, particularly women.
“We are grateful to the Zimbabwean Government for creating the Women’s Bank, this is our sixth year of operation the bank has reached out and given loans to about 115 000 people, 53 percent of the women who have accessed loans are into trade, and services and as a bank, while the remaining are mostly into agriculture.
“We are also in asset financing assisting women so that they access necessary equipment, right now the bank has partnered with the Ministry of Finance and the Ministry of Agriculture to disburse tractors to women,” said Dr Chikava.
She however bemoaned shunning of the available financing initiatives as people think they are an exception for a certain category of people.
Weighing in Dr Nigel Chanakira of Success Motivation said the funding had long been talked of but nothing had materialised.
“I think the National Venture Capital Fund is probably one of the greatest opportunities that we have, it was introduced in the budget several years ago but it has not been operationalied it has not really come to the fore, US$100 million dollars was promised but we have not really seen it on the ground.
“I actually prescribe that our youths will go far if we can get at least US$10 million, give people in the mix of startups, entrepreneurs already in play,” said Dr Chanakira. – The Herald
