core foundation africa » Zimbabwe’s SMES Ministry Impressed by Core Foundatio’s Innovative Pursuits

Zimbabwe’s SMES Ministry Impressed by Core Foundatio’s Innovative Pursuits

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June 8 , 2017 / Posted by admin / News Uncategorized /  / No Comments

Zimbabwe’s SMES Ministry Impressed by Core Foundatio’s Innovative Pursuits

Zimbabwe’s Ministry of Small to Medium Enterprises expressed its gratitude on the sterling work being done by Core Foundation’s youthful team towards the development of start-ups and small to medium enterprises in the country.

Speaking at the signing ceremony of the Memorandum of Understanding between the Ministry and Core Foundation, Mrs Evelyn Ndlovu, the Ministry’s Secretary acknowledged the efforts by Core Foundation to improve livelihoods in Zimbabwe.

The signing ceremony was done at the Ministry’s Head Office in Harare recently.

Core Foundation is a local social entrepreneurship organization that focusses on entrepreneurship development, wealth creation, skills development, venture capital as well as rural and enterprise development.

Mrs Ndlovu described Core Foundation as a group of young people who have taken it upon themselves to come up with brilliant ideas of partnering with the government in order to improve the lives of the people of Zimbabwe.

She encouraged other young people to come up with such innovative ideas and initiatives which the Ministry can also partner.

“The signing of this MOU marks the beginning of a strong close relationship between these young people and this Ministry” she said.

Core Foundation’s engagement with the Ministry of SMEs is meant to facilitate the development of start-ups and small businesses through resource mobilization, creation of incubators, business linkages, trade promotion and nurturing of the entrepreneurial culture.

Last year, the Core Foundation spearheaded the hosting of the second National Steering Committee on Formalisation of the Informal Sector, which was a stakeholder’s consultative forum on coming up with strategies on regulating the activities of informal business players.

Mr Alvin Nyika, the founder and chairman of the foundation expressed gratitude towards the support and partnership that the Ministry has been giving them in their previous various developmental initiatives.

“We are working together in order to promote the work of the Ministry of Small to Medium Enterprises towards helping the intended beneficiaries in the community.” Said Mr Nyika

He also added that his organization has a charitable arm that is responsible for giving support to the vulnerable members of the community.

During the signing ceremony of this Memorandum of Understanding, it was also noted that Cooperatives are an important aspect of the SME sector and thus must be recognized and be promoted.

Mrs Ndlovu said that cooperatives are a collective enterprise which generates jobs and creates many beneficiaries along the way and therefore such initiatives deserves attention and support.

“We want cooperatives to also enter into the agricultural and manufacturing sector since cooperatives have the power of collective thinking” Mrs Ndlovu added.

The government’s gesture towards calling for partnership in the development of the economy especially by recognising and supporting other players in the promotion of SMEs is a welcome development.

This is because, currently, Zimbabwe’s economy has been negatively affected in various ways thus causing many people especially the young ones to find it difficult to get a decent and rewarding job.

Such people are thus resorting to starting their own initiatives towards survival and wealth creation which in turn means that the majority of the working population will be absorbed by the SME sector.

It is widely believed that small to medium enterprises plays a critical role in the sustenance and development of economies globally but unfortunately the majority of these initiatives fail because of lack of finance and the relevant knowledge to professionally run businesses.

As such, when the youth themselves do partner the government to spearhead the creation of a conducive environment for the development of SMEs as was demonstrated by Core Foundation, it shows the extent of inclusivity that is being adopted in the sector.

Financial institutions have also registered their interest to be involved in the development of small to medium enterprises in Zimbabwe.

This was revealed by Mrs Evelyn Ndlovu who said that prior to the signing of the Memorandum of Understanding with Core Foundation, she was engaged in a breakfast meeting with players in Zimbabwe’ financial sector with regards to SMEs as well.

By Brian Kazungu


Last month, a leading investment banking firm, Renaissance Capital (RenCap), released a report on Nigerian banks titled “Nigerian banks navigating through the stormy sea.”  This report explores the ripple effect of the current economic situation on Nigerian banks following the sharp decline in the price of oil since 2014, the weakening Naira and expectations of possible devaluation. The report also gave more insight on what would happen to Nigerian banks if the Naira is devalued.

According to the report, here is the threefold impact of devaluing the Naira on Nigerian banks:


According to the reports, banks with a higher proportion of forex Risk Weighted Assets (RWA), such as Guaranty Trust Bank (GTB), would see a bigger drop in Capital Adequacy Ratio (CAR). This is because a naira devaluation would inflate RWA. In the event of this, the First Bank of Nigeria Holding (FBNH), Ecobank Nigeria and Skye would be quickest to breach the minimum CAR requirements and feel the pressure to raise capital. From RenCap’s assumptions, Fidelity Bank and Stanbic IBTC are in the best position from a capital perspective, with capital buffers of 4 percent and 3 percent in the event of a 50 percent naira devaluation. The most sensitive banks to a weaker naira are GTBank, FCMB and Zenith because they do not have sufficient FX tier 2 capital buffers to shield them from the impact of a devaluation.

The report also stated that if the capital of some banks come under threat from a devaluation or asset quality pressure they can decide to cut their dividend payout ratios significantly. Specifically, Renaissance estimate GTBank and Zenith still have the most room to lower their payout ratios and could improve capital by as much as $86mn and $95mn, respectively, if they normalise their payout ratios in line with the sector average (30 percent), or as much as $218mn and $240mn, respectively, if they decided to pay no dividends in 2016.

Foreign exchange gains/losses

Since it is difficult to estimate the magnitude of FX gains or losses banks could make in the event of a devaluation, RenCap analysed Nigerian banks’ quarterly FX income in 2014 and 1Q15, checking for the sequential spikes in FX income in 4Q14 and 1Q15 – the quarters in which the Naira was devalued and trading restrictions were still largely non-existent, i.e. before their introduction in mid-February 2015. From their analysis, banks could make a decent one-off Foreign Exchange gain in the aftermath of a devaluation given their potentially long currency positions. According to the report, devaluation would only lead to a nominal one-off gain on currency positions, as an easing in trading restrictions is what could further increase the banks’ trading gains. In terms of growth in foreign exchange income, GTBank, Fidelity and Stanbic ranked top.

In a 2015 conference call by RenCap, GTBank management said that its currency position was $600m – $700m. This represents the volume of the bank capital that could benefit from a devaluation, which would reflect on the income statement through foreign exchange gains.

The read-through for us from the above is that the banks could make decent one-off FX gains in the aftermath of a devaluation given their potentially long currency positions.

Asset quality

A depreciating exchange rate, in an import-dependent country such as Nigeria, has implications for the banking sector’s asset quality. The Cost of Risk (CoR) levels is expected to rise in the sector this year by at least 70 bpts. This would be possible considering the sharp slowdown in GDP growth to between 2 and 3 percent, the ongoing FX restrictions and another highly anticipated devaluation.

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