An examination of the limitations faced by women-owned SMEs in accessing the Zim-AIED revolving credit facility “AgriTrade” (2011 – 2013)

Abstract

The purpose of this study was to examine the main limitations faced by women-owned SMEs in the agricultural sector in accessing the Zim-AIED revolving credit facility (AgriTrade). The paper sought to identify the main limiting factors at borrower level, lender level and the Fund level that resulted in fewer women than men borrowing under the AgriTrade Fund. It also examined financing models that exist in Zimbabwe and globally which are promoting women access to credit. The study was carried out in the ten provinces of Zimbabwe by collecting data from women-owned SMEs that accessed loans under the AgriTrade Fund. The study also identified loan managers from the three AgriTrade partner banks namely CABS, Trust Bank and MicroKing, who administered the Fund during the period, 01 June 2011 to 30 September 2013. The study used a case study of the AgriTrade Fund and distributed questionnaires to a sample of 100 women-owned SMEs and ten loan managers from the three AgriTrade partner banks broken down as: two from CABS, two from Trust Bank and six from MicroKing. All the ten questionnaires from the loan managers were returned while a total of 65 questionnaires from women-owned SMEs were also returned, giving a response rate of 65 per cent. The main findings of the study showed that the main limitation for women’s’ access to the AgriTrade Fund were access to collateral, access to training, access to markets, ability to generate business proposals and financial information and the lack of business records. The age of applicants, marital status and level of education attained, influenced the decisions by loan officers and loan managers in loan approval. This study recommends that women-owned SMEs should get assistance from their spouses, families and friends on access to collateral, the preparation of business proposals, the preparation of financial information and the keeping of business records which are important for accessing business loans. Women should attend business training workshops, seminars and field days to gain experience in establishing and running their businesses which are a pre-requisite in applying for bank loans. Commercial banks were recommended to adopt loan assessment methodologies used by microfinance institutions (MFIs) which are suitable for SMEs. Banks which cannot establish stand-alone SME departments were recommended to collaborate with MFIs which have experience working with SMEs, both in the rural and urban areas. Developmental organizations such as NGOs and private companies were recommended to provide funding, specific for both start-up and existing women projects under the SME sector.