Loans, high interests hamper SMEs

20Feb 2016
Our Reporter
Business
The Guardian
Loans, high interests hamper SMEs

Small Industries Development Organization (Sido) is set to meet with the Credit Guarantee Scheme (CGS) Steering Committee on the hindrance on securing loan facilities affecting the country’s small and medium enterprises.

mango

Sido Financial Service Manager, Haika Shayo said at a workshop for entrepreneurs engaging in honey production, mango production and spices on Friday that difficulty in obtaining loans from CGS poses great obstacle to the sectors development.

Sido offers loans to the entrepreneurs through the National Entrepreneurship Development Fund (NEDF) to empower their business supplies.

“We are planning to have a meeting with CGS steering committee that includes members from commercial banks and the Ministry of Industry and Trade to discuss various issues relating to loans,” Shayo said at a workshop on Hazard Analysis and Critical Control Point-internal Verification.

“Most SMEs have expressed concerns over the cost charged on asset valuation, claiming it is too high for them to afford paying Sh2m for asset valuation,” she said. Other challenges to access loan include bureaucracy, high interest rates charged on loans as well as the length of time to obtain a loan.

ITC has selected 10 enterprises producing mango, spices and honey in Tanzania to participle in its programme on Hazard Analysis and Critical Control Point (HACCP) to meet international requirements on food safety and compliance standard.

The workshop was organized by International Trade Centre (ITC) and SIDO with the support from the Ministry of Foreign Affairs of Finland.

Currently, SIDO is struggling to secure more funds from the government and other donors to ensure SMEs access loans to operate their business effectively.

The current interest rates charged on loan is 18 per cent per annum for production projects and 22 per cent per annum for non- production projects funded under NEDF. Sido provides loan facilities in the form of group and individual loans.

Group loans are extended to solidarity groups. Meanwhile a Dar es Salaam based entrepreneurs Zahrocki Ahmed expressed concern, saying SMEs would not move forward without small access to loans.

Against the hitches, she called on SIDO and CGS to organize a meeting with entrepreneurs for settlements. Through CGS entrepreneurs can borrow between Sh5m to Sh50m depending on the size of the business.

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