Zambian SMEs gain easier access to finance as Credit Guarantee Scheme increases
The crucial role of SMEs in the Zambian economy
In Zambia, small and medium enterprises (SMEs) play a vital role in the economy, accounting for 70% of GDP, 88% of employment and 97% of all businesses. Despite their economic weight, these businesses face many challenges, including limited access to finance, which hinders their development and competitiveness.
Increase in the allocation to the Credit Guarantee Program for 2025
In his 2025 Budget Speech delivered on 27 September 2024 before the National Assembly, the Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, announced a flagship measure to support SMEs: the significant increase in the allocation to the Credit Guarantee Scheme. This fund will increase from 386 million kwacha in 2024 to 851.7 million in 2025, or approximately 32.5 million dollars. This initiative aims to facilitate access to finance for SMEs by offering them loans on more advantageous terms.
Support for economic reforms and sustainable agriculture
The increase in the budget envelope is part of a series of reforms designed to strengthen Zambia’s economic recovery from recent economic challenges. It will also support the Sustainable Agriculture Financing Facility, a mechanism designed to promote financing for sustainable agriculture. The programme is open to all farmers and non-farmers who can apply for a loan from participating banks.
Importance of this initiative for Zambian SMEs
Despite the importance of SMEs to the Zambian economy, these businesses have often struggled to secure financing, even with previous support initiatives. The increase in the allocation to the Credit Guarantee Scheme for 2025 demonstrates the government’s determination to address this situation by providing SMEs with greater access to the financial resources needed to grow and become competitive.
Conclusion
The substantial increase in the budget allocated to the Credit Guarantee Programme marks a decisive step in supporting SMEs in Zambia. This measure will enable these businesses, which are the engine of the economy, to benefit from improved financing conditions, thus stimulating their development and strengthening the country’s economic resilience.
