Former Economics Association of Zambia President Noel Nkoma has observed that government’s delay in paying local suppliers is affecting the growth of the SME sector.
Mr. Nkoma said most SMEs are struggling to keep their businesses running after supplying their goods and services to the government which has delayed in paying them.
He said government is holding up huge resources belonging to various SMEs in domestic debt.
“What has happened is that government has focused on dismantling the foreign debt stock neglecting the domestic debt which has been swelling over the last few years. Government is busy contracting various suppliers without paying for their services and goods,” Mr Nkoma said.
Mr. Nkoma said a number of SMEs are now folding up and are losing assets to banks from where they obtained capital finance.
“The biggest challenge facing SMEs today is the lack of capital. Now if an SME will fight to get capital and they get an order from GRZ, they literally throw in every ngwee in that order because they know it is GRZ as their client but now GRZ is delaying payment which is killing the SME,” he said.
Mr. Nkoma noted that government is the major buyer of goods and services and should be responsive to the needs of the SME sector.
Mr. Nkoma who is also Managing Director and Chief Executive Officer of Betternow Finance Company, a micro finance lending firm said the SME sector is the engine of economic growth which should be supported by all.
He was speaking on a radio programme on Hot FM called Midweek Business monitored in Lusaka.
I see the James Banda whooping has stopped paining Noel! Welcome back!
No much Truth in this, Just an Excuse. Some SMEs get Loans and misuse the funds by buying luxury Cars like Range Rovers, with time they fail to service the Loans hence Banks pouncing on them. Zambian Entrepreneurs needs Education or Awareness on Cash Management. Don’t Reap before you Sow!!!
What he has said is very true. And then on top of that, luxury cars and lifestyle generally comes in. Both of you are right.
@ The Prince……..Well Spoken Sir!!
@ Prince there might be some truth in what you have said but I don’t think it right to out-rightly dismiss the reason given by Noel that government owes a-lot of suppliers. What might be a contradiction is that we here all too often that SMEs are unable to obtaining financing from banks so it is interesting that Noel can now say that banks have lent a lot to SMEs that now cant service their loans due government not paying for goods and services delivered. Another element is that alot of the procurement by government from SMEs is not done transparently but through patronage. So you find that if one falls out of favour or the person who assisted in getting the contract or the person changes position then their are delays in getting paid. I believe their are many elements to this issue.
I know a friend who supplied goods to Zambia Police as far back as 2008 and has not been paid yet. (Amount K 65,000) The guy’s business has almost folded up. He cant pay rentals for his small office in town and for his house in Chunga.
May I be enlightened about Noel Nkhoma’s Alma Mater! What are his qualifications?
economics
He has an MBA from university of Surrey UK
Is this the same gentleman who was clobbered and pushed in the swimming pool by RB’s son James Banda during the run up to the 2011 general election?