Kikwete decries high interest rates.

 

President Kikwete 

By Veneranda Sumila ,The Citizen Reporter

In Summary

She said that with the coming of Private Equity, many of these issues will be addressed. Mkoba targets the fast growing SMEs with capital needs ranging between $1 million (Sh1.6 billion) and $15 million (Sh24 billion).

Dar es Salaam. High interest rates charged by financial institutions, specifically banks, have been a hindrance to business growth and expansion in the country, the President has said.

Speaking during the launch of Mkoba Private Equity Fund President Kikwete said that despite the fact that demand for credit has been growing overtime banks have never reduced their lending rates.

Mr Kikwete noted that in 2012 and 2013 alone, credit to private sector increased by 15.3 per cent.

“Charging high interest rates make bank borrowing very costly, especially to small and medium enterprises and individuals, thus discouraging business expansion and new investments,” he said, adding:

“The launch of this equity will increase competition, new products, new ways of financing and encourage other equity funds to join the sector which in turn will impact our local businesses positively,” said the President. Mkoba Private Equity Fund investment of $300 million (Sh480 billion) will change the financial sector landscape for the better, noted the President.

Meanwhile Mkoba Private Equity Fund Partner and CEO, Dr Frannie Leautier, said despite having excellent market strategies and potential to become regional actors many SMEs in the country, lack capacity to develop strategies and business plans to take advantage of the available opportunities.

“Growth and expansion capital for years have been lacking from both the international and domestic banking sector. When SMEs are able to access capital, it is with highly interest rates that are unattainable for most businesses,” said Dr Leautier.

She said that with the coming of Private Equity, many of these issues will be addressed. Mkoba targets the fast growing SMEs with capital needs ranging between $1 million (Sh1.6 billion) and $15 million (Sh24 billion).

And CEO Round Table chairman Ali Mufuruki urged the government to share its development plans with the local private sector at the initial stage so as to enable the latter to participate effectively in different projects.

“The government has been planning secretly only to share with foreign investors like the World Bank and International Monetary Fund before sharing with the locals; because of this, we got kicked out by foreigners in different developmental projects,” said Mr Mufuruki.

“I appeal that you realise we (locals) can participate in different projects, involve us from the initial planning stage, this will help us to also start planning of where to get capital and different opportunities. This country cannot be built by foreigners.


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TMS consultant managing director Sebastian Kingu said that the government must consider of integrating entrepreneur skills in the primary school curriculum so that people can start to think of entrepreneurs at very early ages.