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Zimbabwe: Innovation Crucial for SMEs Financing

Zimbabwe: Innovation Crucial for SMEs Financing

Financial innovation can be defined as the act of creating and then popularising new financial instrument. This includes advances over time in the financial instruments and payment systems used in the lending and borrowing of funds and the execution of financial transactions.These advances include innovations in technology, risk transfer and credit and equity generation. The creation of new technological advances in the financial products market has potential to increase amounts of credit to borrowers.

Is it possible to think outside the box?

Under the multi-currency regime the ability of banks to lend to the private and public sector is a function of the different sources of liquidity. The main sources of the scarce liquidity are export earnings, diaspora inflows, offshore credit lines, foreign direct investment inflows and capital transfers including grants. These sources of financing continue to dwindle while at the same time the expectations from all sectors continue to grow.