Andrew
Trade Focus
Allan Majuru
INTERNATIONAL trade has, over the past few years, been going through a paradigm shift, where cross-border business is no longer the preserve of established companies.
Historically, international trade was synonymous with large corporates, with brick-and-mortar facilities in every space that they performed transactions.
The mere thought of trading beyond one’s borders warranted exorbitant financial muscle, sizeable infrastructure, and physical presence which automatically relegated small, micro and medium-sized enterprises (SMEs) to local trade.
Contrary to historical trends, the advent of technological advancements and the increasing connectivity of the global village, SMEs are now breaking barriers and establishing a strong presence in numerous countries from the comfort of their countries of origin.
Any doubters of the international market and its feasibility will recall how Covid-19 has proven them otherwise.
The entire world was shutdown with little physical access in 2020, which forced entrepreneurs to innovate and adopt technology to allow for business to resume.
SMEs that were quick to adapt have seen changes in the way they do business and are optimistic about palpable growth in the future.
Arguably, the ongoing changes in international trade have created opportunities for SMEs, with some taking control of markets that have previously been a preserve of large corporates.
Emerging technologies and contemporary business models have also made it possible for the SMEs to create a strong market presence in international markets.
Going forward, for Zimbabwean SMEs to contribute meaningfully to the export fiscus, there is urgent need for deliberate efforts to offer more support to local SMEs so that they grow beyond Zimbabwean borders and in the process, increase visibility of locally- produced products and services in foreign markets.
Small companies also need to leverage on technology to connect with markets they do not have a physical office in as there is huge potential for micro-multinationals to exist in more than one country.
According to the World Trade Organisation (WTO), digital and e-commerce platforms have made it possible for small companies to reach on average between 24 and 39 foreign markets. For example, WTO notes that South African small companies using eBay reach on average 30 markets, whereas traditional South African firms reach less than five.
From this evidence, it clear that there is room for micro-multinationals to quickly reach more markets.
Why micro-multinationals matter
One might ask: Why focus on micro-multinationals when they are small?
For starters, all giant companies started small and approaches in export markets will determine how one small company can make it. Further to this, SMEs account for most businesses worldwide and contribute immensely to job creation and global economic development.
According to the World Bank, SMEs represent about 90 percent of businesses and provide more than 50 percent of employment worldwide. Formal SMEs contribute up to 40 percent of Gross Domestic Product (GDP) in emerging economies. SMEs drive innovation and competition in the market, hence their role in economic development cannot be undermined.
According to the International Trade Centre (ITC), “Investing in SMEs is a long-term and smart strategy, with sustainable returns that multiply across societies, regions and countries.”
To put figures to the growth, ITC suggests that “SME exporters grow four percent faster than non-exporters, with the difference more pronounced when comparing importers with non-importers.”
Thus, coming up with initiatives and activities that will grow local-based small businesses into micro-multinationals is critical. For example, internationalisation of local SMEs requires setting up facilities and structures that accommodate this kind of growth.
Ensuring that mobile data is affordable is one other way that partners can support growing SMEs.
Further to this, use of online market stores and payment options requires Governments and interested parties to work together in attracting necessary investments in the area.
By becoming easily accessible from across the world and with necessary tools to facilitate online transactions, it will be easier for local SMEs to grow into multinationals.
It is easy for micro-multinational to grow quickly It is agreed that SMEs are better placed to latch onto opportunities and assume risk as compared to large corporates.
This is attributed to the fact that being small, SMEs can quickly respond to changes in the market and are willing to settle for lower terms than their larger established counterparts.
While this might be the case, it is fast becoming evident that they need a lot of support to establish themselves across borders.
The assumption in most cases is that the advent of the internet has made it easier for SMEs to reach out to a wider global market, yet most SMEs are failing to grow a strong online presence because of reasons which include lack of expertise and necessary technologies required to do so.
To address these challenges, local SMEs must not shy from capacity building interventions where they can unlock their potential.
Currently, ZimTrade — the national trade development and promotion organisation —is assisting local SMEs to develop a strong regional and international footprint through its online trading platform, Shop@Zim.
This is an online marketplace where international buyers meet local sellers in a bid to grow Zimbabwe’s exports using the virtual space.
ZimTrade is also implementing export capacity development programmes to equip SMEs — with a special focus on young people and women — with necessary expertise that will make it easy for them to develop products and services that will be competitive in export markets.
For example, the Eagles’ Nest Youth Export Incubation Programme that is now in its second phase is targeting youth-led enterprises whilst a new programme dubbed Next She Exporter has been developed to assist women entrepreneurs.
Allan Majuru is the ZimTrade chief executive officer.
Bongani Ndlovu
Online Reporter