Effectiveness of the Citizens'Economic Empowerment Commission in the Disbursement of Loans to Small and Medium Scale Entrepreneurs

Abstract

The desire to empower citizens in Zambia has been a common call for all successive governments (Seglin, 1990). Loan financing is the major source of eternal finance amongst entrepreneurs in Zambia. This can be accessed through the Citizens‘ Economic Empowerment Commission, Commercial Banks, Micro Financing Institutions and other non-bank institutions that provide assistance to entrepreneurs. Many studies carried out in other countries, both developed and underdeveloped, have validated this problem of lack of access to finance among entrepreneurs and have attributed various factors to it. Countries worldwide, including Zambia, the trend has been to try and better the access to finance by Small medium Scale enterprises. Against this background, the Citizens‘ Economic Empowerment Act was enacted in 2006, among its main objectives was to enable the most vulnerable in society have access to empowerment funds. Conclusions and recommendations were derived from the findings of the study which were in line with the research objectives. Conclusions revealed that though SMEs are still faced with lack of access to finance, the support that the SMEs are getting from the Commission is still minimal. Small Medium Enterprises are unable to access loans due to harsh conditions, such as the requirement to produce collateral and documentary requirements prior to loan approval. The study concludes with some recommendations to help the Commission improve its operations in the disbursement of loans to SMEs. The following are the recommendations: the Commission should relax collateral requirements and charge lower interest rates; scale down standard requirements before loans are disbursed and increase Public Awareness. The government should provide adequate financial resources to CEEC and increase the independence and autonomy of the Commissioners.