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Bianca Mlilo, Business Reporter
THE Government has urged small to medium entrepreneurs to adopt a cluster approach in their operations so as to fully enjoy economies of scale, which include reduced taxes.
A cluster system involves housing business units that are in the same line of work under one roof and having them order materials communally. Bulawayo already boasts of two clusters — the leather and clothing clusters. The city has since set up an SMEs centre at Old Mutual premises in the city centre to accommodate the two clusters.
Small to Medium Enterprises and Cooperative Development Minister Sithembiso Nyoni said the cluster approach would be implemented across the country as a priority intervention this year.
“We are doing this (clustering) so that from now on we can facilitate that you order your materials in bulk to make your products cheaper,” said Minister Nyoni.
“We will also negotiate that when you are a cluster and your materials are coming in bulk, there can be a tax reduction because you are manufacturing.”
Minister Nyoni also said her ministry had engaged Old Mutual Zimbabwe to avail more workspace for SMEs by reducing the rentals at its various properties dotted around the country, which would then be used by the entrepreneurs.
In Zimbabwe manufacturers enjoy rebate of duty on imported capital equipment for the manufacturing, mining, agricultural and energy industry. A rebate is a waiver of both Value Added Tax and customs duty.
This tax reduction, said Minister Nyoni, would make goods produced by SMEs more affordable, in turn making them competitive on both domestic and foreign markets.
The cluster system, first implemented in Bulawayo, would allow business to grow effectively among members of the cluster.
The ministry has pledged to also chip in to market SMEs in clusters and help them place bulk orders at a cheaper price.
Minister Nyoni also said SMEs should embrace the use of plastic money, saying this would ensure that they record more business because relying on cash transactions was a thing of the past.
Bulawayo Chamber of SMEs public relations officer Mr Cornelius Moyo said the leather cluster had engaged tanneries to sell them hides at a cheaper price and the engagements were quite promising. This, he said, would ensure competitive and stable pricing.
A 2012 Finscope Micro, Small and Medium Enterprises Survey in Zimbabwe indicates that there are 2,8 million SME owners employing 2,9 million people, translating into 5,7 million people dependent on the sector, contributing more than 60 percent to the Gross Domestic Product.
@BiancaMlilo
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