The Government of Zambia is currently in the process of creating an Entrepreneurial Fund for the private sector to facilitate the creation of a scheme for issuance of long-term credit guarantees to Small and Medium Enterprises (SMEs) in Zambia on low-interest terms.
The announcement was recently made by Zambia’s Minister of Finance, Felix Mutati, who said that the Fund is aimed at enhancing the capacity of small-scale private sector players in order to facilitate their participation in accelerating the growth of the economy.
Among the targeted enterprises, are those involved in agriculture, aquaculture, value addition, renewable energy, and off-grid power generation projects.
In addition, Mutati recently appealed to the French Development Agency (AFD), the international development wing of the French Government, to invest in the credit guarantee scheme.
Maddame Laurence Bretton, Operations Director of AFD, said that AFD will consider the proposal.
SMEs account for 70% of Zambia’s GDP and 88% of the employment, according to a research from the Bank of Zambia (BoZ) and the International Labor Organization (ILO).
In November 2016, the Industrial Development Corporation (IDC) of South Africa has signed a line of credit of USD20m with the Development Bank of Zambia (DBZ) to support SMEs in the country.
In October 2016, the African Development Bank (AfDB) approved a USD50m line of credit to DBZ for lending to local SMEs.
Earlier in 2016, DBZ allocated USD30m for lending to SMEs in the country. These loans mean to create stable employment, empower citizens, develop infrastructure, and contribute to Zambia’s economic growth.
In March 2015, AfDB approved a USD3m line of credit to Madison Finance Company, a financial institution targeting local SMEs in Zambia by offering various financial products and services.