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Prosper Ndlovu Business Editor
WITH small to medium enterprises (SMEs) fast becoming an integral component of modern economies, increased support is needed for the sector to attract more investment and broaden employment opportunities particularly for developing countries.
Given their inclusive nature, which allows equal participation of citizens across gender, age, and the rural and urban divide, SMEs provide hope for the future at a time when big corporates are scaling down on operations and retrenching workers.
In Zimbabwe SMEs are yet to realise their full potential due to general lack of coherent operations reflected in the sector’s minimal contribution to the national fiscus.
An estimated 5.7 million Zimbabweans out of 13 million total population are working in the SMEs sector, according to the 2012 Finscope survey.
However, most young businesses still contend with the issues of legal and regulatory reform, capacity building and basic corporate governance, which also limit their ability to access capital funding from banks.
In this regard, experts have urged increased support for SMEs that is based on sound research and innovation.
The few success stories, experts say, have been blighted by poor market and financial linkage barriers that weigh down on progress.
Harnessing logistics to tap the domestic market and exports is also a major challenge.
Hence governments and the private sector have been called to collaborate in shaping sound micro, small to medium enterprises policies and investment decisions that would unlock increased participation of young businesses in mainstream economy.
“The government should craft a policy to propel finance intermediaries to extend more credit to micro, small to medium enterprises, protect SMEs from unfair global competition and establish a credit guarantee for start up businesses,” said Daniel Chinyemba, the president of the Zimbabwe Chamber of SMEs.
For United Nations Development Programme (UNDP country director, Verity Nyagah, the answer lies in embracing a value chain approach to match national and regional demand and supply fundamentals.
This would translate diverse innovative ideas of budding entrepreneurs into huge domestic earnings and growth, she says.
“The sector, according to various studies, can contribute significantly to economic growth, social stability, equity and is indeed one of the most important vehicles through which poor people can escape poverty,” said Nyagah.
The value chain approach has been lauded for enhancing product quality and competitiveness in both domestic and export markets.
The Ministry of SMEs in Zimbabwe, in partnership with UNDP, for instance, has initiated an innovative honey production process through the value chain development initiative.
The programme, which is being piloted in Umzingwane, Insiza and Lupane districts in Matabeleland region, has managed to consolidate fragmented small scale honey production that are now able to better harness the bargaining power in selling processed honey and its residue products.
SMEs and Cooperative Development Minister Sithembiso Nyoni is on record stressing the need to “create and maintain an enabling environment to fully exploit” SMEs untapped potential in order to achieve goals set in the country’s economic blue-print, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset).
The blue-print prioritises value addition and beneficiation, which is a major highlight of the regional economic integration agenda that is espoused in the African Union, the Southern African Development Community (Sadc) and the Common Market for Eastern and Southern Africa (Comesa) treaties.
Similar initiatives such as kapenta fishing in Binga, cattle fattening in Mberengwa, Savings and Credits Cooperatives (Saccos) in Insiza, Lupane and Gokwe, have grown significantly and are enhancing household economic capacity of their respective members.
The Binga Sacco, for instance, has to date accumulated more than $50,000 from an initial grant of $10,000 disbursed to them by the ministry through UNDP support in 2013.
Not only do initiatives of this nature promote sustainable exploitation of the country’s vast resources but also dovetail the spirit of indigenisation and economic empowerment.
These are few examples of well coordinated and formal entrepreneurial effort as many SMEs continue to operate behind the scenes — enduring a hide and seek relationship with authorities.
Recently, the Comesa Business Council (CBC), working with the private sector, launched a technical capacity strengthening project to empower SMEs in standards and food safety management systems, which further buttresses the critical role of the sector.
CBC chairperson Amany Asfour said the initiative was necessary to enable SMEs competitively integrate into the supply chains of different industries and other potential markets.
“Active participation of SMEs or businesses in national and regional value chains remains very limited,” Asfour said.
The project will first be piloted in six Comesa countries namely Ethiopia, Kenya, Malawi, Rwanda, Uganda and Zambia.
Her sentiments dovetail the need for innovative strategies to ensure public private partnerships and SME participation in national and regional value chains.
This is essential, particularly as the region moves towards implementing the Comesa, Sadc and EAC tripartite Free Trade Area (FTA) following its successful launch in June this year.
The grand TFTA is a precursor to the establishing a Continental FTA by year 2017.
The opening up of borders is expected to have a multiplier effect on well run SMEs who would enjoy broadened market and trade opportunities.
Host countries to thriving SMEs are already enjoying increased employment creation, quality goods and overall competitiveness of their industry.
“This business model, built on inclusion and sustainability, offers a pathway toward economic, social and political justice for all,” said United Nations secretary general Ban Ki-moon in his message to mark International Day of Cooperatives on July 5.
Bongani Ndlovu
Online Reporter