At the moment, our biggest challenge in the economy, especially with SMEs, with the informal sector, is access to capital. When I go round, I can vouch that the people now have general skills to undertake their activities. The skill is there to an extent of some managerial skills also and technology. However, the thing they lack most is access to capital and that is what we are trying to assist.
Hon. Sen. B. Sibanda, yes the banking institutions are conservative, but when I talk about mindsets, I am talking not only about the mindsets of us individuals but of institutions also. The way I see it is that – and this is what we tell the banking institutions, if they do not face up to the reality of our situation, they will be out of business sooner or later. This is because the business of a lending institution is to lend money. If you are not lending, you get broke. You make money from the interest you charge when lending to people. If you do not lend, and as it is, they may say, we only lend to established firms but the base of established firms is reduced. So, in the end you cannot avoid lending to people who are plying their trade in the informal sector.
Madam President, what I am aware of is that, most financial institutions or banks now have a macro-financing window to address and attend to small economic players. Clearly, yes they are conservative but we have to shift their mindsets and we do so – I know many of them have visited and sent teams to India, Bangladesh, essentially to understand how big commercial entities can lend to small people. I am happy to say that there is now a growing base of macro-financial institutions in the country. I think in total you have something like 160 or so macro-financial lending institutions. I think only five of them are deposit taking, the rest cannot take deposits. They can only come with their capital and lend out. I am happy to say that this is already taking place. It increases the level of liquidity in the economy.
How do you prevent disposal – these are issues I do not have an answer to right now but we will learn from the experiences of other countries. They will be dealt with and addressed in the regulations. What happens if a cow which is collateral dies – I think those are issues that are addressed through insurance and I am sure that insurance schemes will also come handy. You can see the ripple effect it will have in the entire economy – the insurance companies will also come in, I am sure and so on. However, all these issues will be dealt with in the regulations.
Hon. Sen. Mustvangwa, thank you very much for your support to the Bill, in particular, we are talking about women, youth, economic players who are in the informal sector. Clearly, we cannot leave women behind and in this case they are very much in the forefront of informal businesses. I am going to commission a study, Madam President, to do a survey of the informal sector. We have got a regional company which is specialized in conducting those surveys. We are doing a survey of the informal sector; we want to know how many they are. We also want to know what specific activities they are doing, the environment, and the location – are they under a tree or in some accommodation.
Now, on the basis of information that we will gather, we will be able to form informed decisions which can be the basis of our policy formulation, so we will do this undertaking. We also want to know how many women, how many are the youth, the elderly, and the disabled, are business people in the informal sector, if I may make reference to a contribution made later. All that information will be very useful to formulate our policies.
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