SEDCO offering loans
SEDCO, (Small enterprise development Cooperation) has received US$250 000a for small loans for entrepreneurs. These loans are for an amount not exceeding $2000 and are payable at 15% interest per Annum. However these loans are to be paid of in three months. To qualify for this loan an entrepreneur should have collateral and generally fulfill the requirements for a normal loan. Most entrepreneurs will not qualify for these loans, and even if they did, the loans would put a yoke on their back . A third of the world’s population remains outside the credit of traditional banking. In Zimbabwe this percentage is more than double. How then, can we encourage entrepreneurs when entrepreneurs do not have access to finance?
Around the world SME loans are usually not as stringent as bank loans. In some cases, entrepreneurs are given a window period of about a year before they need to begin paying back these loans. Longer period of repayment, low-interest rate. These SEDCO loans are the total opposite. I am not a banking expert, but to me, these loans expose them to higher risk.
Professor Yunus has been quoted regularly saying, “The ‘rich’ aren’t paying their loans back at the moment,” he said. “The poor are … every time … 99.6% of our loans are paid back. So who’s a bigger risk?”
While businesses had fantastic technology at their disposal with which to tackle the world’s problems, the drive to make profits prevented them from using these technologies to help people. Prof Yunus of the Grameen Bank
I do not recommend these loans to entrepreneurs, unless they are positive beyond reasonable doubt that they can pay them back. In a nutshell, the economy is still working on a cash basis. This is good start. Things will get better and their loan requirements will loosen.
On a positive note, a women’s bank is set to open by the end of the year. This will bring finance to the marginalised women of our nation. PBA is also working on offering long-term, low interest micro loans, such as those popularized by the Grameen bank. Access finance will assist the poor to get out of poverty.