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Ray Bande
Senior Reporter
HIGH production costs are eroding the competitiveness of local small and medium enterprises, Harare Institute of Technology (HIT) Pro Vice Chancellor Dr Talon Garikai has said.
In his address during a National Competitiveness Commission (NCC) seminar for SMEs held at a local hotel last Thursday, Dr Garikai said high production costs are at the detriment of the enterprises’ development.
“It is sad that small and medium enterprises are not getting the finance and loans that can allow them to grow because of certain restrictions that we have. There are legal restrictions that will not allow our SMEs to grow.
“The Small and Medium Enterprises Act of Zimbabwe defines SMEs as any business that employs seven to 75 permanent workers with an asset base of US$250 000 to US$42 million.
“That relegates most of our SMEs to mere vendors who cannot access loans simply because they do not meet the defined characteristics of SMEs.
“Right now we have a pair of slippers costing US$0.50 on our streets and yet the local SME player cannot produce the same product and sell at that price.
“The production costs simply do not allow any local SME to produce that product, sell at that cost and remain in existence. You will notice that the price only covers electricity costs in the production expenses, if at all it is enough to,” said Dr Garikayi.
Speaking during the same function, Secretary for Manicaland Provincial Affairs and Devolution, who was the guest of honour at the event, said SMEs are contributing a third to the economy, hence the need to enhance their competitiveness.
“We want to urge our SMEs to be aggressive in both production and marketing. They are an important part of this economy given that they contribute about a third to the Gross Domestic Product.
“This puts into context the need for our SMEs to be competitive on the market. As Manicaland, we really need to leverage on the vast product base we have that range from timber, horticulture and hospitality industry, among many others,” he said.
Mr Seenza also encouraged the SMEs to ensure that they add value to their products as a way of enhancing competitiveness on the international market.
The NCC, which hosted the seminar, is a department under the Ministry of Industry and Commerce and is responsible for promoting competitiveness through providing a platform for dialogue between labour, business, academia, Government and all key stakeholders, among other initiatives.
The seminar is the first of a series of similar engagements to be held in other parts of the country.
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