GOVERNMENT should substantially cut on domestic borrowing to allow for credits to be loaned out to SMEs at affordable rates, says Civil Society for Poverty Reduction (CSPR) executive director Kryticious Shindano.
Mr Shindano told the Parliamentary Committee on Economic Affairs that with reduced borrowing by Government, local interest rates would automatically come down for the good of small-scale entrepreneurs.
“Government could much more easily afford to borrow internationally at rates that are generally much lower than those of the Kwacha.
“Without Government being active in the domestic credit market, local interest rates should come down without any subsidies or other measures,” he said.
He said it was important that other economic sectors such as communication, agriculture and construction received more Government attention for a balanced economic development.
Mr Shindano said the huge allocation for the Farmer Input Support Programme (FISP) did not reach the poor farmers in the countryside.
He said however that the programme could be much more effective if it were channelled through the private sector. Mr Shindano said subsidies that might be justifiable for certain inputs or crops could be much more effective if channelled to the intended beneficiaries through private sector agents.
He said expensive credit facilities for small and medium enterprises which limited participation of many people in economic activities could address the growing disparity between economic growth and poverty reduction if controlled.
Mr Shindano told the committee that affordable credit facilities for small and medium enterprises would help eradicate the growing disparity of poverty levels.
“CSPR recommends that Government should help the country address the growing disparity between economic growth and poverty reduction with affordable credit facilities for small and medium enterprises that will help eradicate the growing disparity of poverty levels,” he said.