BoZ SME Credit Guarantee Scheme poised to unlock SME financing
Zambian Social Economist Kelvin Chisanga
By Kelvin Chisanga
The proposed SME Credit Guarantee Scheme by the Bank of Zambia represents an important step toward addressing persistent financing constraints usually faced by the small and medium enterprises.
By providing partial credit guarantees to participating financial institutions, the facility is structured to reduce lending risk while preserving sound credit assessment and market-based loan allocation.
The design of the scheme is significant in that it does not involve direct lending by the central bank, but instead works through commercial banks, allowing improved macroeconomic conditions to transmit more effectively into private sector credit.
In practical terms, the facility is expected to ease collateral requirements, expand access to finance for viable SMEs, and support business participation in productive sectors such as agriculture, manufacturing and services.
Beyond improving access to credit, the scheme has the potential to strengthen job creation, deepen financial inclusion and enhance domestic value-chain development.
At the same time, its long-term effectiveness will depend on disciplined implementation, strong governance and responsible borrowing behaviour, particularly with timely loan repayment by beneficiaries.
Overall, the SME Credit Guarantee Scheme is a well-aligned policy instrument that complements ongoing macroeconomic stabilisation efforts, if operationalised efficiently, could play out a meaningful role in supporting inclusive and sustainable economic growth.
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