Financial experts propose a new SMEs funding plan
The NMB Bank head of Business Banking, Donatus Richard (right), responds to questions from participants during the Dar es Salaam Business Expo-2019 in the city yesterday. With him (from left) are Bankable Tanzania’s Ivan Tarimo, Banker Dora Kyungu and SSC Capital Tanzania’s Salum Awadh. PHOTO | ANTHONY SIAME
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A Common Fund, according to them, would be efficient in supporting SMEs
Dar es Salaam. Financial experts have suggested new ways of raising funds for financing Small and Medium Enterprises (SMEs) instead of depending on loans from commercial banks.
Speaking during the Dar es Salaam Business Expo yesterday, they said the main objective was to highlight and create awareness of the ‘Missing Middle’ that has largely been unintentionally neglected.
A former chief executive officer of CRDB Bank, Dr Charles Kimei, suggested that a ‘National Guarantee Fund’ should be formed to collect money from local and international organisations and assist SMEs financially.
“We have always witnessed the government and companies giving money to various institutions. However, I believe that when the funds are collected by a single institution, they may work better when it comes to financing the SMEs,” he said.
Besides, Dr Kimei suggested that the funds be raised from the individuals and companies through shares.
“Individuals and companies may put their money to a business and share the profits. The process must be regulated by the Capital Markets and Securities Authority (CMSA) to evaluate the capital value of the business,” he said.
According to him, commercial banks are not on favour of the SMEs due to lack of collateral, bankable business plans, financial statements, which pose high risk to the financiers.
“We must go beyond taking loans from commercial bank if we are to help the SMEs grow,” he said.
The Mwananchi Communication Ltd (MCL) Managing Director, Mr Francis Nanai, called for the establishment of a ‘Common Fund’ that would force all commercial banks to collect money from a single unit.
“This’d help the financiers to share the funding burden and risk. It will also lessen the interest rates of the loans,” he said.
He also asked the government to establish a special bank for SMEs.
“The government must do like what happened to Tanzania Agriculture Development Bank (TADB) because this sector plays a big role in jobs creation (85 per cent) and contribution to the Gross Domestic Product (35 per cent),” he said.
Ms Dora Kyungu, who is a banker, said corporate companies should also shoulder their small business partners or suppliers to get loans from banks.”
