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Oliver Kazunga, Senior Business Reporter
THE Government has come up with a number of incentives that will be given to formalised small to medium enterprises to enhance their contribution to the economy, a Cabinet Minister has said.
Since 2015, the Government has been spearheading the formalisation of the SMEs sector following reports that about $5,7 billion was circulating in the informal economy.
Small to Medium Enterprises and Co-operative Development Minister Sithembiso Nyoni told Business Chronicle in an interview that her ministry has come up with a draft document on the formalisation strategy.
“Formalisation of SMEs research has been done and a draft document is being considered. We have gone through the draft document and by end of the month a final draft would have been made after which we will then launch it,” she said.
“It is my take that we have to make sure the formalisation programme gets a buy-in from the SMEs; and thus incentives for formalising operations of SMEs will include among others a six-months tax holiday, which is being offered by Zimra between now and June.”
The minister said the Small Enterprises Development Corporation (Sedco) fund was being capitalised but would not give loans to unregistered SMEs.
Presently, Minister Nyoni said Sedco has about $15 million, which is set to be advanced to formalised SMEs as working capital.
Of late, SMEs have continued to face funding challenges as local banks have been reluctant to lend to the informal sector due to lack of collateral security by the enterprises.
“My ministry has engaged the Reserve Bank and we have agreed that the monetary authority will ensure 12 banks across the country provide a window for registered SMEs to borrow. In addition, as Government together with Old Mutual, we are also organising working and display space for registered SMEs,” said the minister.
In the past, SMEs have struggled to secure working space as some of the premises they would have secured were being charged rentals that the entrepreneurs cannot afford.
The Government has noted that SMEs are crucial in economic development and recently, players in the sector were being made to pay a dollar per day to local authorities for them to operate.
Minister Nyoni is on record as saying the money SMEs were paying to local authorities was not going to the fiscus but into the urban councils’ coffers.
As a result, some local authorities were thriving on the vendors with between 40 percent and 65 percent of their revenue coming from the SMEs.
— @okazunga
Online Reporter