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Michael Tome
Business Reporter
The GOVERNMENT and private sector players should take a leading role in supporting the micro, small and medium enterprises (MSMEs) constituency through capacity building and financing given their growing contribution to the Zimbabwean economy, Minister of Women Affairs, Community, Small and Medium Enterprises Development Dr Sithembiso Nyoni has said.
According to a FinScope survey, MSMEs contributed US$8,6 billion to the country’s gross domestic product (GDP) and employed more than 5, 9 million people in 2022.
Annual turnover was mainly dominated by agriculture at US$4,6 billion, wholesale and retail (US$4,6 billion), natural resources and mining (US$1,6 billion), construction (US$915 million) and tourism (US$748 million) while the manufacturing sector contributed US$500 million.
The sector remains a vital segment of the Zimbabwean economy considering that the country has over 3 million SME players, of which 15 percent are formally registered.
As part of initiatives to improve capital requirements in the sector, Financial Securities Exchange Limited (FINSEC) recently launched Pfuma/Inotho, a small to medium enterprises funding and listing platform that enables SMEs to raise capital on the stock exchange, a development that is anticipated to provide “patient” capital for budding businesses.
Face several challenges
However, SMEs face several challenges that continue to negatively impede their growth, the major one being limited access to “patient” capital-raising options.
Some have not been able to borrow because they do not have collateral.
According to the International Council for Small Business, SMEs account for 50 percent of global employment, and up to 90 percent of employment in low-income countries.
Jobs created by SMEs can lead to increased incomes, improved standards of living and reduced poverty.
SMEs contribute significantly to the GDP of most countries.
In developing countries, SMEs contribute up to 40 percent of GDP, while in developed countries, they account for around 50 percent of GDP.
In a recent interview on ZTN Prime, Dr Nyoni said the Government was doing all it could to improve SMEs’ working environment, including the funding aspect.
“SMEs promote economic diversification by creating new industries, products and services. They reduce reliance on a handful of larger companies that may dominate the market.
“The ministry has come up with four funds that are helping in propping up SMEs and these include the Zimbabwe Community Fund, the Women’s Development Fund, and the Small and Medium Enterprises Development Corporation (SMEDCO) for funding of registered businesses,” said Minister Nyoni
She said the funds are aimed at fostering support for entrepreneurial activity and innovation, and productivity among the working population.
Minister Nyoni indicated that organisations in the private sector and other Government departments need to plan and train people in this important segment of the economy, as well as provide them with workspaces, markets, technology, financing and linkages to make them grow.
She also said more effort should be put towards creating a conducive legal environment that makes the segment thrive.
“Some SMEs don’t need money at all, but a friendly environment that allows them to grow. So, we would want to focus on capacity building, through training, to run their businesses like bookkeeping, accounting, and we also need to educate them on the importance of paying taxes,” she added.
Her ministry is currently involved in the SMEs graduation programme and has moved to teach them about the important role of organisations like the Standards Association Of Zimbabwe (SAZ), the Zimbabwe Revenue Authority (Zimra), and the Procurement Regulatory Authority of Zimbabwe (PRAZ).
Economist Johnson Paguta said SMEs contribute significantly to the economic growth of both developed and developing countries.
Additionally, they create new markets, promote competition, and stimulate productivity, leading to the overall growth and development of economies.
“SMEs are vital for local development as they often operate in rural and underdeveloped areas. By providing employment and training opportunities, they contribute to local economic development and help to reduce poverty,” said Mr Paguta.
Finance and Economic Development Minister Professor Mthuli Ncube recently indicated that his ministry seeks to improve the SMEs sector by augmenting the role of Empower Bank and Women’s Bank.
Online Reporter