Smedco’s Virtual Incubation Programme now in full swing
THE Ministry of Small to Medium Enterprises and Co-operative Development is aiming at enhancing the lifespan and success rate of SMEs through its Virtual Incubation Programme.
Speaking on the sidelines at a SMEs workshop organised by DHL Express, director of business development in the ministry, Mr David Nyakonda said the birth rate of SMEs was almost similar to the demise rate.
“Many SMEs’ lifespans are very short and this shows that they need help from the ministry for them to remain in business. The demise of SMEs is mainly due to lack of training, demand driven production, workspace and linkages to critical stakeholders.
“We enlist SMEs on board and we will handhold them over a period of three to six years. During this period, we train them on technical areas, business areas, interact with them, visit their premises and inquire about their challenges then group them according to their challenges and then address the challenges from a corporate viewpoint,” said Mr Nyakonda.
The Virtual Incubation Programme was launched last year by Vice-President Emmerson Mnangagwa.
Mr Nyakonda also said the Small and Medium Enterprises Development Corporation (Smedco) was now operational and had since started disbursing loans. He added that a similar criteria to select beneficiaries has been implemented although with a bias towards manufacturers.
“In terms of funding, they (SMEs) have to specify whether they want working capital or development capital and then we attach them to banks or Smedco. Smedco is now operational and started disbursing loans early this year. The doors are now open for SMEs and we have a bias towards manufacturers because we want to export, value add and exploit our natural resources.
“The interest rate is much lower compared to that of microfinance institutions. So far, a sizeable number of beneficiaries have received loans and more people keep applying for the loans. The turnarounds of the loans will go a long way in funding working capital and bringing life to many of our SMEs. The maximum loan amount is $50 000 per individual or corporative,” he said.
Smedco which changed its name from Small Enterprises Development Corporation (Sedco) following amendments to the SME Act in February 2014 is a parastatal under the Ministry of Small and Medium Enterprises and Co-operative Development.
It is a development finance institution which primarily exists to promote the development of micro, small and medium enterprises, and co-operatives in the country, through lending and capacity building. It is also one of the finance houses in the country whose mandate is to capitalise the small businesses.
Mr Nyakonda urged aspiring entrepreneurs to research on the market for their products before venturing into business so as to prevent premature demise due to low uptake.
“It is necessary for SMEs to be involved in a product they have knowledge about and full appreciation of the life cycle of the product. Issues of the life cycle also relate to the market. If the uptake of the products is high, then the product gets into a new phase, from idea generation to production and this is the growth stage,” said Mr Nyakonda.