SMEs bank is ready to roll
THE Office of the President is setting up a nine-member committee of the Small to Medium Enterprises Bank after securing US$10 million seed capital from the Reserve Bank of Zimbabwe, a senior Government official has said.
Estimates suggest that SMEs employ over 60 percent of Zimbabwe’s population, contributing around 50 percent of GDP.
The SMEs bank will seek to unlock value that is stymied by the inability of the sector to access banking services.
The Small to Medium Enterprises Development Corporation (Smedco), a statutory body, will superintend over the new bank.
Smedco came under central bank supervision following amendments to the Banking Act in 2014.
SMEs and Co-operatives Development Minister Sithembiso Nyoni told The Sunday Mail Business that, “We are happy to announce that all necessary documentation and legal processes are now in place to kickstart operations.
“We have received US$10 million funding from the Reserve Bank of Zimbabwe to open a new bank for the small and medium businesses.
“What’s left is the nine-member committee that the President’s office is setting up through wide consultations. Once we are done with that process, we will reflect back and see if there are other nitty-gritties left but as we speak we are almost done with all the procedures to start our own bank.”
Most local SMEs are informal, and are grappling with inadequate financing and infrastructure; and entrepreneurial, marketing and management skills.
Though many SMEs are reluctant to register for tax purposes, over 9 000 have capitalised on a Zimbabwe Revenue Authority moratorium — which ended on June 30, 2017 — to allow them to formalise without attracting penalties for overdue obligations.
The lapse of the moratorium means penalties for late registration, as well as output tax, will be paid from the date when the SME is deemed to have become liable for VAT registration.
Many SMEs view paying tax as an unwanted cost to business rather than a normal business practice.
Taxes applicable to SMEs include presumptive tax, income tax, value added tax, pay as you earn and withholding tax.
Government’s database shows that more than 5,7 million businesses are operating in the informal sector.
Zimra is broadening its tax base and speeding up fiscalisation to enhance revenue collections through plugging leakages and minimising tax fraud.
Fiscalisation has seen fiscal devices linking Zimra servers and companies’ electronic registers to provide real-time transmission of transaction data to the tax collector.