African Century Leasing (ACL) has acquired a credit line of $5 million from the Dutch development bank, FMO which is meant to enhance Small to Medium Enterprises (SMEs).
The credit line is earmarked to support SMEs in various sectors of the economy. This is the second tranche of funding that ACL has received from FMO having accessed $8 million in 2013.
Speaking at the signing ceremony for the new credit line, the Managing Director of ACL, Stanley Matiza revealed that the leasing industry requires more long term funding to meet the needs of local industry
“The process of retooling local industry is being hampered by lack of availability of long-term funding and as such ACL will continue to engage the DFI community so as to continue accessing credit lines and support the growth of Zimbabwean economy,” he said.
Speaking at the same event, FMO representative, Jaap Reinking, revealed that the transaction is part of his organisation and the Dutch government’s Micro and Small Enterprise Fund’s strategy of reviving and building a comprehensive financial system in poor countries .
“FMO is committed to creating sustainable economic impact in emerging markets, By providing long-term funding to ACL it will contribute to the development of the SME sector in Zimbabwe.
“The country remains deprived of adequate access to finance which is also the case for an early growth leasing company, he said.
ACL has disbursed $82 million in lease finance to various SMEs in the productive sectors of the economy,
Meanwhile, Finance Minister, Patrick Chinamasa applauded this initiative saying it will prompt growth amongst SMEs in the country.
“This fits well within governments’ strategy of creating access to finance for SMEs,” he said.
The credit line comes at a time when SMEs continue to highlight inadequate funding as the major constraint to their growth.
The minister also said, “The significance of SMEs in terms of employment and contribution to the country’s gross domestic product cannot be over emphasized
“My ministry values funders like FMO who have an interest in creating sustainable economic impact in emerging markets through provision of long term finance,” he said.
According to Business Research Volume 3 of 2013, SMEs in Zimbabwe contributed significantly to the GDP and are responsible for the livelihoods of about 80% of the population.