SMES WERE SIDELINED OVER K10BN COVID-19 SURVIVAL FUND – BOZ OFFICIAL

By BUUMBA CHIMBULU

AN assessment conducted by the Bank of Zambia (BoZ) on its K10 billion Targeted Medium-Term Refinancing Facility (TMRF) has established that Small and Medium Enterprises (SMEs) did not benefit from it. The facility was set up in 2020 to assist with liquidity to businesses and individuals during the Covid-19 period through Financial Service Providers (FSPs).

But the assessment conducted in 2022 revealed that a large portion of it benefitted corporates while most of the SMEs did not as they were considered to be very risky by FSPs, says BoZ Assistant Director for Bank Supervision, Lyness Mambo at the 2023 Zambia Impact Investment Summit (ZIIS23).

During a panel discussion on “Building and enabling an environment for Sustainable Finance and SME Growth in Zambia,” Ms Mambo said statistics had shown that the majority of the funds went to corporates and not SMEs. FSPs, she said, funded according to their risk appetite. “During Covid-19 we had an initiative the K10 Targeted Refinancing Facility (TMTRF) that the BoZ had for FSPs to lend the affected sectors.

Following on that we did a study in 2022 to see who benefitted the most from that facility. “Although the funds were available, not just to priority sectors but also to SMEs, most SMEs did not have access to that as they were perceived to be very risky.

Because we were providing liquidity support, the banks were bearing the credit risks on those portfolios so they did their own assessments on who they perceived to be risky,” she said. As a remedy, Ms Mambo said the central bank was exploring the possibility of establishing a credit guarantee scheme. She said this was expected to help finance the SMEs.

“So as a follow up to that, we are exploring the possibility of a establishing a credit guarantee scheme. “We are hoping that partners will come through and take over or establish other schemes to provide risk sharing and help SMEs for them to have access to finance,” Ms Mambo said.