Govt. urged to create micro guarantee fund
Lusaka, February 19, 2014 ZANIS—The Zambia Credit Reporting Alliance has urged government to come up with a micro guarantee fund which can guarantee lending to small and medium enterprises (SMEs).
This lending can be done through risk sharing between the commercial banks involved and government.
Alliance chairman Noel Nkhoma said this will entail converging commitment with the passion towards uplifting SMEs and at the same time committing the fact that should the transaction go bad, both government and the financial institution involved will take a 50-50 exposure.
Mr. Nkhoma said this step has been taken in many countries that include Nigeria where it has proved successful in ensuring lending to SMEs with the view to growing their businesses.
He said if the country was going to commit to grow the SMEs, government should allow a certain level of laxity in terms of credit processing.
He noted in an interview with ZANIS in Lusaka that banks were still hooked to the traditional due diligence process of lending which in most cases excludes the SMEs.
Mr. Nkhoma said if the country was going to be rigid in terms of credit processing, it would fail to achieve its intended goal of empowering the SMEs which are crucial to the growth of the country’s economy.
He said this does not mean that the country should have a reckless lending policy in the market which he noted was not good for the economy.
Mr. Nkhoma however stressed that it was important for the country to have a prudent lending policy which must also be alive to the fact that SMEs need special care products which the banking sector has at the moment failed to provide.