malvernmugadzikwa
Business Writer
Zimbabwe’s micro, small, and medium enterprises (MSME) formalization has not increased over the past ten years, with the lowest percentage occurring among small businesses and individuals, a FinScope MSME Survey 2022 Report shows.
The informal sector has served as the foundation of the economy ever since the 2000s hyperinflation crisis caused industry to collapse.
Traders are frequently forced to engage in informal trade because of obstacles to doing so, such as difficulty obtaining travel documents or trading licenses, excessively long border wait times, overcharging by customs officials, and a lack of understanding of formal procedures.
“Formalisation has not improved over the past decade at 14 percent, with the lowest proportion being in the individual to small enterprises,” reads the report.
“The main barrier is due to a business size where the enterprise is too small or lacks funds for registration. Hence, business owners indicate a desire to formalise if the process was made free and well sensitised to inform the business on the benefits of formalisation.”
In a bid to broaden its revenue base, the Treasury introduced a 2 percent tax on all electronic transactions in 2018. Previously, former deputy Reserve Bank Governor Kupukile Mlambo said it has also managed to bring in the informal sector to contribute to tax revenues, which they normally do not do.
“The MSME sector continues to be a key pillar for economic growth (GDP) and employment creation showing an increase in the estimated number of employees and profit (GDP) contribution of the sector up to US$8,6 billion post the COVID-19 pandemic.
“It continues to absorb more female adults which is key to addressing the gender gap,” stated FinScope.
The report noted that loner entrepreneurs would be seen in 2022, suggesting that the industry serves as a source of income for many adult Zimbabweans with modest personal monthly incomes.
Bongani Ndlovu