Zambia: Government to launch VC Fund

The Zambian Government is to set up a Venture Capital Fund this year with seed money amounting to $4 million to provide equity financing to small and medium enterprises in the country.

According to the minister of Commerce, Trade and Industry, Felix Mutati, the fund once functional will help SMEs grow their businesses.

“This fund will be under the Zambia Development Agency and is coming in the first quarter of 2011 to provide equity finance, targeting the SMEs. We will initially start with $4 million as seed money,” he pointed out.

He was speaking at Lusaka’s Mulungushi International Conference Centre (MICC), when he opened a three-day SMEs workshop organized by the ZDA and Paramount Transitions Limited under the theme: ‘Empowering Entrepreneurs beyond 2011’ recently.

A preferential procurement Statutory Instrument will be launched shortly to encourage local businesses to provide more jobs in the country.

The MCTI will provide a conducive business environment by ensuring that the fund and preferential procurement instruments are in place and the SME policy is launched in the first quarter of 2011.

SMEs play a critical role in Zambia’s economy as they provide 85% of employment in the country. However, entrepreneurs are facing difficulties in accessing finances from banks.

On the performance of SMEs in 2010, Mutati said they have reduced their default levels in repaying loans as opposed to corporate who are now culprits with a high default rate.

“The banks should build a relationship with the SMEs in the country in the coming year to ensure that accessibility of finances is easy,” he elaborated.

Mutati urged SMEs to learn how to invest in and grow their business as opposed to expanding their capital on wasteful ventures.

And ZDA director for micro and small enterprises Windu Matoka said the agency will coordinate the venture capital fund with the help of the Development Bank of Zambia (DBZ).

Source – Shout-Africa – By Nawa Mutumweno