The Cabinet of Zimbabwe reportedly has approved a proposal by the Small Enterprises Development Corporation (SEDCO), a publicly funded business development agency, to set up a microfinance bank with the intent of recapitalizing the state enterprise by raising deposits from cooperatives and small and medium-sized enterprises (SMEs). SEDCO also intends to auction some of its properties to raise capital. SEDCO requires an estimated USD 30 million to regain its financial footing.
SEDCO’s difficult financial position is attributed to inadequate funding, a high tax bill and a default rate of 20 percent on loans disbursed to SMEs. The Zimbabwe Stock exchange recently announced plans to set up an exchange for small and medium-sized enterprises (SMEs) as an additional measure to raise capital for SEDCO.
By Brendan Millan, Research Associate
About the Small Enterprises Development Corporation (SEDCO)
Established by Zimbabwe’s Ministry of Small and Medium Enterprises and Cooperative Development, SEDCO is a public development institution whose mandate is to capitalize small and medium-sized enterprises (SMEs). SEDCO’s budget is not available.
Sources and Additional Resources:
NewsDay: “Cabinet Approves SME Bank” by Gamma Mudarakiri, http://www.newsday.co.zw/2012/12/25/cabinet-approves-sme-bank/
MicroCapital.org story, December 21, 2012,“Government Hopes Zimbabwe Microfinance Wholesale Facility Can Lower Microfinance Institution Interest Rates That Reportedly Hit 40% Monthly”, http://www.microcapital.org/microcapital-brief-government-hopes-zimbabwe-microfinance-wholesale-facility-can-lower-microfinance-institution-interest-rates-that-reportedly-hit-40-monthly/
MicroCapital.org story, February 22, 2012, “Lacking Credit Bureau, Zimbabwean Microfinance Struggles with Consumer Protection”, http://www.microcapital.org/microcapital-brief-lacking-credit-bureau-zimbabwean-microfinance-struggles-with-consumer-protection/
MicroCapital.org story, August 30, 2006, “United Nations Development Program Grants $32.3 million to the Zimbabwe Ministry of Small and Medium Enterprises, in Support of Microfinance Initiatives”, http://www.microcapital.org/united-nations-development-program-grants-323-million-to-the-zimbabwe-ministry-of-small-and-medium-enterprises-in-support-of-microfinance-initiatives/
MicroCapital Universe Profile: Small Enterprises Development Corporation (SEDCO), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Sedco
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