MAKE BANK OF ZAMBIA RELIEF FUNDS MORE ACCESSIBLE, PLEADS ZAMBIA ASSOCIATION OF MANUFACTURES

By BUUMBA CHIMBULU

THE K10 billion Targeted Medium-Term Refinancing Facility (TMTRF) still needs more flexible conditions to ensure that small businesses and households easily access the funds.

The Bank of Zambia (BoZ) in April last year set up a K10 billion TMTRF aimed at cushioning the adverse effects of Covid-19 on enterprises and individuals, with the funds expected to be distributed for onward lending through commercial banks.

Currently, the stringent conditions attached with accessing the TMTRF is limiting the impact the funding is supposed to have on the economy and economic growth, says Zambia Association of Manufactures (ZAM) Policy Analyst-Data and Evidence, Kasonde Chituta.

Mr Chituta said for the TMTRF to have a strong effect on the Zambian economy and experience the economic growth, the funding needed to trickle down to the Small and Medium Enterprises (SME’s) and households, and spur domestic production as well as local demand.

“The TMTRF funding therefore, failed to trickle down to the SME’s and households, for whom it was destined for. Furthermore, even though demand for working capital increased considerably to finance ongoing operations, the facility has been out of reach for most SME’s.

“Despite the TMTRF initiative reducing lending rates, the funding remains unreachable to most SME’s. Challenges to access the TMTRF are even exacerbated for women-led SME’s, who are already excluded from accessing traditional financing,” he said in an interview.

Citing China as an example, Mr Chituta said the country was able to record economic growth amidst Covid-19 using refinancing facility which had flexible conditions for SMEs who were key drivers for economic growth.

Mr Chituta explained that the Chinese Government put a moratorium on loan payments for SME’s, with a deadline that has been extended to the end of 2021.

Coupled with the delayed loan repayments, he further explained, the Chinese authorities eased loan size restrictions for online loans and other credit support measures for eligible SMEs and households.