The Sunday Mail
The small to medium enterprise (SME) sector has over the past two decades made significant contributions to Zimbabwe’s economy at a time big corporations were struggling.
Despite their crucial role and potential for growth, funding options for further growth remained limited.
While big companies have stock market options to raise capital for expansion, SMEs have been excluded from participating on these transparent and regulated platforms for raising capital due to their size.
However, the Financial Securities Exchange Limited (FINSEC) has opened doors for the SME sector to participate in capital markets.
Recently, the firm opened up its Growth Enterprise Markets (GEM) Portal to allow budding enterprises access to a more regulated and transparent platform for raising capital for expansion.
FINSEC general manager Mr Garikayi Munema said this was part of the company’s initiatives to enhance financial inclusion in the country.
The Reserve Bank of Zimbabwe (RBZ) estimates that inclusion in capital markets is currently estimated at 1 percent.
The initiatives, Mr Munema said, are driven by the realisation that SMEs play a significant role in the economy, especially job creation.
“Growth Enterprises and SMEs remain the anchor for sustainable economic growth through employment creation, enhanced capacity utilisation, import substitution, financial inclusion and general improvement of livelihoods for citizens.
“In both developed and emerging economies, SMEs are the highest contributors to economic activity, growth and development.
“Through the GEM Portal, FINSEC is availing its infrastructure to co-ordinate efforts by SMEs, financiers, development partners and policy makers to unearth and polish the country’s hidden GEMS, the SMEs for sustainable economic development.”
The GEM Portal, which is one of the initiatives by FINSEC for SMEs, enables enterprises to apply for funding and possible listing online.
It uses alternative data analytics through integrations to financial services providers of the applicants and uses digital algorithms, including inbuilt artificial intelligence capabilities, to analyse, score and screen applicants for suitability of funding in real-time.
The funding and listing pathways available on the GEM market include short, medium and long-term debt, equity finance, restricted offers, pre-initial public offering placements, private placements leading to full initial public offering and listing in some cases.
Government is adding support to the SME sector, mainly women and youths, through capacitating empowerment institutions like the Zimbabwe Women’s Microfinance Bank, Community Development Fund, Empower Bank and SMEs institutions.
“The country stands to realise demographic dividend by harnessing the youthful populace to a productive use through inclusive growth.
“The 2021 Budget will further support and broaden the Youth Employment Tax Incentive (YETI) as well as capacitating empowerment institutions,” said Finance and Economic Development Minister Professor Mthuli Ncube in his 2021 Budget Strategy Paper.