ITC facilitates Access to Finance Programme for Zambian SMEs
The International Trade Centre (ITC) has partnered with the African Training and Management Services (ATMS) project implemented by the African Management Services Company (AMSCO) to provide technical assistance to improve access to finance for small and medium-sized enterprises (SMEs) in Zambia.
AMSCO’s CEO and Managing Director Paul Malherbe said, ‘This initiative is in line with AMSCO’s mandate to assist African enterprises in becoming competitive and sustainable.’
One hundred SMEs, drawn from those that have strong export potential or a significant impact on the economy, will receive support and training to improve their financial capabilities. This programme also aims to enhance the capacities of both financial and non-financial service providers to offer appropriate services to a previously underserved and mainly indigenous SME sector.
Enhancing capacities of SMEs, as well as improving their access to finance contributes to wealth, job creation and economic diversification. However, in Zambia SMEs are perceived to have high credit risk and banks are wary of lending to them.
‘ITC recognizes the difficulties encountered by SMEs, and has launched several practical initiatives to bridge the knowledge gap between SMEs and financial institutions,’ said ITC Executive Director Patricia R. Francis.
As part of its contribution to implementing the Joint Assistance Strategy for Zambia, the African Development Bank (AfDB) will identify suitable projects in manufacturing, tourism, agro-business, construction and the financial sector. They have proposed a project that will include financial and technical assistance to critical stakeholders in Zambia.
The financial assistance component comprises a partial credit guarantee facility and lines of credit to two local Zambian banks – Investrust and Zanaco – which have both approached AfDB for help in meeting SME financing needs.
Business development service providers will receive assistance to enhance their capacity to provide support to SMEs for the development of bankable proposals and coaching before, during and after the loan application. The project will help financial service providers to better assess the risks and future potential of SMEs through ITC’s risk assessment and risk management software, LoanCom, which enhances the quality of loans, improves access to finance and mitigates the risk usually associated with SME lending.
This programme builds on Zambia’s draft micro, small and medium-sized policy and the Zambia Decent Work Country Programme. These reforms and policy actions will facilitate investment in Zambia’s private sector including the SME sector. It is aligned with Zambia's Vision 2030 and with the Fifth National Development Plan towards broad-based wealth and job creation through citizenry participation and technological advancement.
The technical assistance component, coordinated by ATMS/AMSCO and delivered by ITC and the International Labour Organization (ILO), is for participating banks and their staff. In addition, core business development service providers and sectoral business associations, as well as SME and micro-enterprise managers, will benefit from this project.
