Opinion / Columnist
ZISO's response to the Monetary Policy Statement
08 Aug 2015 at 06:27hrs | Views
Zimbabwe Informal Sector's Organisation (ZISO) noted the monetary statement by the Reserve Bank of Zimbabwe (RBZ) governor Dr. John P. Mangudya.
ZISO welcomes the reduction of interest rates for bank loans as a progressive step towards facilitating access to credit for the small and medium enterprises. This is important in view of the fact that the informal sector is now the major driver of the economy. However there is a need to consider a special interest rate for the informal sector in particular mining and farming operations, manufacturing and women's initiatives.
It is hoped that access to credit will help to resuscitate local industry and increase local productivity and exports. ZISO believes that the informal sector has the potential to be transformed into major factories and industries if government makes a deliberate effort of supporting it's growth and formalization.
The amendment of the banking act is also a very positive step. It is also noteworthy that the central bank has delayed the promulgation of the act to ensure widespread consultations with stakeholders. The new banking act must make it easy for informal traders to open and run bank accounts. Zimstats revealed that the majority of players in the informal sector operated without formal bank accounts. This was attributed to lack of knowledge and illiteracy about banking and limited and erratic incomes. The banking act must take into account the need to tailor make banking facilities to accommodate and create incentives for the informal traders to utilize formal banking channels. In its conceptualization of the informal sector, the National Economic Consultative forum made the following observation:
"Tragically, a miniscule 14% of MSMEs utilise banking facilities, being 14% of those surveyed, with only 3% of all the MSMEs operating bank accounts in the name of their businesses. Apparently the principal barriers to availing themselves of banking facilities were that total incomes were too limited to justify recourse to such facilities, and for many income flows were very irregular. Nine per cent of those surveyed and not using bank services stated that their failure to do so was their absence of financial knowledge and illiteracy"
The central bank is urged to consider allocating a percentage of the 210 million external loan towards supporting informal sector enterprises to stimulate growth and formalization.ZISO implores the RBZ to look seriously into the potential of the informal sector and devise strategies to support it's potential to help transform the country's economic fortunes and ease acute levels of unemployment.
ZISO values and supports the central bank's consultative approach and will continue to provide input and insights regarding interests of and issues affecting the informal sector.
ZISO welcomes the reduction of interest rates for bank loans as a progressive step towards facilitating access to credit for the small and medium enterprises. This is important in view of the fact that the informal sector is now the major driver of the economy. However there is a need to consider a special interest rate for the informal sector in particular mining and farming operations, manufacturing and women's initiatives.
It is hoped that access to credit will help to resuscitate local industry and increase local productivity and exports. ZISO believes that the informal sector has the potential to be transformed into major factories and industries if government makes a deliberate effort of supporting it's growth and formalization.
The amendment of the banking act is also a very positive step. It is also noteworthy that the central bank has delayed the promulgation of the act to ensure widespread consultations with stakeholders. The new banking act must make it easy for informal traders to open and run bank accounts. Zimstats revealed that the majority of players in the informal sector operated without formal bank accounts. This was attributed to lack of knowledge and illiteracy about banking and limited and erratic incomes. The banking act must take into account the need to tailor make banking facilities to accommodate and create incentives for the informal traders to utilize formal banking channels. In its conceptualization of the informal sector, the National Economic Consultative forum made the following observation:
"Tragically, a miniscule 14% of MSMEs utilise banking facilities, being 14% of those surveyed, with only 3% of all the MSMEs operating bank accounts in the name of their businesses. Apparently the principal barriers to availing themselves of banking facilities were that total incomes were too limited to justify recourse to such facilities, and for many income flows were very irregular. Nine per cent of those surveyed and not using bank services stated that their failure to do so was their absence of financial knowledge and illiteracy"
The central bank is urged to consider allocating a percentage of the 210 million external loan towards supporting informal sector enterprises to stimulate growth and formalization.ZISO implores the RBZ to look seriously into the potential of the informal sector and devise strategies to support it's potential to help transform the country's economic fortunes and ease acute levels of unemployment.
ZISO values and supports the central bank's consultative approach and will continue to provide input and insights regarding interests of and issues affecting the informal sector.
Source - ZISO
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