Fresh Mind Movement and Entrepreneurship (FMME) has called for deliberate policies aimed at reducing lending interest rates to make it easy for Small and Medium Enterprises (SMEs) to access affordable finance.
Movement Executive Director Kabanda Kaoma told Money News in an interview that current lending rates of 24 to 29 percent are prohibitive and can suffocate businesses.
“Access to affordable finance remains a major obstacle. Current lending interest rates ranging between 24 and 29 percent are considered too high and difficult for small businesses to manage,” Mr. Kaoma noted.
He also called for the suspension of the requirement for fixed assets as collateral because most young entrepreneurs do not own land to use as security when applying for loans.
Mr. Kaoma further implored government to consider granting adequate tax incentives to all all startups.
“Company registration is linked to Zambia Revenue Authority (ZRA), and depending on the tax type, businesses may be required to submit regular tax returns after registration. Without ZRA tax clearance, one cannot open a business account or operate formally. This can be challenging for new businesses that are still stabilizing,” he noted.
He rated Zambia’s current business environment for SMEs at 4 out of 10, noting that the business registration process through the Patents and Companies Registration Agency (PACRA) is straightforward and encourages compliance.
Mr. Kaoma observed that while improvements have been made in business registration, more policy reforms are needed to lower the cost of borrowing, ease collateral conditions, and create a more supportive environment for SMEs.
*On a scale of 1 to 10, I would rate the business environment at 4, or 40 percent. This is because SMEs continue to face serious challenges that limit their growth and sustainability,” Mr. Kaoma stressed.
