– The Chronicle
TREASURY has successfully operationalised the National Venture Capital Fund (NVCF), which has seen about $300 million being disbursed to different entrepreneurs and start-up innovators.
The resources to establish the NVCF were provided for in the 2021 National Budget with the aim of assisting start-ups and other small firms to access working capital, funding for technology improvement and other such requirements.
Finance and Economic Development Minister, Professor Mthuli Ncube, revealed this in Bulawayo at the weekend during a business forum organised by the ruling party Zanu-PF in conjunction with the Affirmative Action Group (AAG).
He said the Government expects the NVCF to be a game changer in steering economic development through provision of equity finance to young entrepreneurs and start-up innovators.
Economists say the equity financing model has an advantage in that it puts no obligation to repay the money acquired through it.
Whereas debt financing involves the borrowing of money, equity financing involves selling a portion of equity in the company.
Prof Ncube said significant progress has been made towards full implementation of the bold financing initiative, which was first announced in the 2020 National Budget.
“The National Venture Capital Fund is one thing that I am very passionate about. That is the source of capital,”
“Already the fund has disbursed close to $300 million but we want to advertise it more widely so that more beneficiaries could come through. Why? Because we want to empower you. We want that fund to finance your projects, whether it’s a start-up, whether it’s a growth project or whatever it is,”
said Minister Ncube.
Initially, the Treasury had earmarked availing $500 million by February 2020 to ensure provision of affordable loans to young entrepreneurs as part of measures to catalyse economic growth and create more job opportunities. In establishing the NVCF, which is a key intervention under the five-year National Development Strategy (NDS1:2021-2025), the Government has underscored the need to encourage entrepreneurship by the youth and women, and particularly helping start-ups to grow and generate new employment opportunities.
“It is not the intention of the National Venture Fund to lend money. The job of that fund is to take equity or quasi-equity in your business, to walk with you as you build your business for seven years or even 10 years without demanding interest because it is an equity holder,”
said Prof Ncube.
“So you will see us rolling it out more aggressively in the next few months.”
Widening the job opportunities and improving livelihoods is in line with the comprehensive drive towards achieving an upper middle-income economy vision by 2030.
To buttress the move, Prof Ncube has also said engagements were continuing with the potential fund managers both local and international who have the capacity to contribute to the NVCF.
He said this year priority would be given to ensuring full operationalisation of the fund while mobilising additional capital to ensure that it meets the capitalisation demands of the economy.
Financing start-up businesses is crucial for Zimbabwe, which has more than three million SMEs of which 15 percent are formally registered, contributing about 50 percent to the country’s Gross Domestic Product (GDP).
It is estimated that about 75 percent of the country’s workforce is employed by SMEs.