Govt, Stanbic Bank partner to address high SME financing costs

The Zambian government has expressed concern over the high cost of capital for Small and Medium Enterprises (SMEs), citing high interest rates and stringent collateral requirements as major barriers.

Nicholas Chikwenya, Director of the Ministry of Small and Medium Enterprises, addressed these issues during the signing of a new agreement between Stanbic Bank and the Zambia Credit Guarantee Scheme (ZCGS) at Stanbic’s Lusaka Head Office on Thursday.

Chikwenya noted that many SMEs struggled to service their loans due to these financial constraints, leading to business failures.

He revealed that the government had been actively engaging with commercial banks to lobby for lower interest rates and more accessible financing options for SMEs.

He announced that, following these efforts, some banks, including Stanbic, would begin offering collateral-free financing products.

Stanbic Bank Zambia Chief Executive, Mwindwa Siakalima, highlighted the bank’s support for SMEs through the “Tamanga” Working Capital Loans.

He noted that this partnership would facilitate increased financing for SMEs, particularly in sectors like renewable energy and agriculture, which are crucial for economic growth.

Siakalima expressed confidence that the new financing options would help mitigate the impact of the current energy crisis on businesses and support agricultural MSMEs to boost food production in Zambia.

Mary Mumba, Chief Executive Officer of the Zambia Credit Guarantee Scheme, emphasized that the collaboration aimed to enhance financial inclusion and ensure SMEs have the resources needed to thrive.

Under the agreement, Stanbic Bank would provide the financing, with the ZCGS guaranteeing the loans on behalf of the SMEs.

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