Product ‘dumping’ costs SMEs

Africa, Midlands State University and Zimbabwe National Chamber of Commerce noted that manufacturing SMEs contribution to GDP was 28 percent in the 1990s and it dropped to 17 percent in 2011.

In this regard the research proposes the internationalisation of manufacturing SMEs in Zimbabwe so as to improve their revenue bases, market share, innovativeness and competitiveness in order to create employment.

Internationalisation is the process of firm involvement in international markets and this can be through exporting, importing or direct involvement.
The research also pointed out that internationalisation of SMEs would assist in getting rid of “the small market effect” and strive to generate income for the local market from the international markets.

This therefore means that the country should export more than it imports in order to maintain a healthy trade gap.

“Despite all the signs that the local market had become saturated and was getting smaller, only a number of SMEs in the formal sector went international and failure by the manufacturing SMEs to internationalise created a myriad of problems for the local market.

“These include low capacity utilisation, failure to support downstream industries, low contribution to GDP, high level of unemployment and unprecedented poverty,” added the research.

Recommendations were thus made in the survey report to map the way forward in encouraging internationalisation of manufacturing SMEs while getting the full benefits.
Government and industry associations were challenged to increase awareness especially in face of globalisation so that entrepreneurs can embrace benefits of internationalisation through both importing and exporting.

This awareness should encompass information about the international market requirements, laws and regulations so that SMEs can do their business fully aware of best business practices and what they are expected to do.

It was also noted that there is need for targeting new SME ventures that have high ambition and the ability to realise these ambitions associated with internationalisation.

“Facilitating SME financing is also very critical as internationalisation requires a lot of funds both for pre- and post-shipment activities and this could be done through Government or industry associations through bank loans and grants,” noted the report.