Bank of Zambia explores ways to fund SMEs to remedy gaps in 2020 refinancing scheme


The Bank of Zambia (BoZ) says it is currently exploring the possibility of establishing a credit guarantee scheme which would help Small and Medium Enterprises (SMEs) with financing.

BoZ Assistant Director for bank Supervision, Lyness Mambo, said at the 2023 Zambia Impact Investment Summit (ZIIS23) on Tuesday in Lusaka that the scheme was currently at its design stage.

During a panel discussion on “Building and enabling an environment for Sustainable Finance and SME Growth in Zambia,” Mambo said this was a remedy for funding SMEs who did not benefit from K10 billion Targeted Medium-Term Refinancing Facility (TMRF).

“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 to come through and take over or establish other schemes to provide risk sharing and help SMEs for them to have access to finance,” Mambo said.

Read more: BoZ governor, Kalyalya, optimistic debt restructuring deal will guarantee over 5-month import cover

Earlier, Mambo said an assessment conducted by the BoZ on its TMRF established that SMEs did not benefit from it.

The facility was set in 2020 to assist with liquidity to businesses and individuals during the Covid-19 period through Financial Service Providers (FSPs).

Mambo, however, said the assessment conducted in 2022 revealed that only corporates benefited and not SMEs as they were considered to be very risky by FSPs.

Mambo added that statistics had shown that the majority of the funds went to corporates and not SMEs.

FSPs, she noted, funded according to their risk appetite.

“During Covid-19 we had an initiative the K10 Targeted Refinancing Facility (TMTRF) that the BoZ had for SMEs to on lend the affected sectors. Following on that we did a study in 2022 to see who benefited 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.

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