SMEs deserve all-round support

system.
With poverty eradication emerging as one of the key objectives, it is thus dependent on enhancing entrepreneurial activities particularly in African countries.
Poverty reduction requires the input of both the Government and the private sector to achieve the desired objectives.
In a discussion paper tabled before the EU-Africa Business Forum four main areas were highlighted as the drivers of the process and these are:
l Creation and development of enterprises;
l Access to finance;
l Education and training and
l Regulatory framework and governance.
It is indisputable that small and medium enterprises in developing countries form the backbone of every economy and are desirable partners for multinational corporations bringing in investments.
Innovation drives business, and it is a prerequisite for further development. Elements of the entrepreneurial process in relation to sustainable economic growth means that SMEs do not only need support during their creation, but also throughout the process of expansion, internationalisation and transfer of the business.
This obviously requires the supportive managerial skills to steer the ship through the attendant organisational and bureaucratic burdens.
Clusters
One of the ways to encourage business activity among entrepreneurs is to promote clusters that bring together businesses of the same sector with the same know-how and exploit the opportunities presented. This way they can easily build on their expertise and emerge as a regional powerhouse with a supportive marketing appeal.
Governments are encouraged to support the concept of clusters through the provision of subsidies, infrastructure investments and tax incentives. In Zimbabwe this is a relatively new concept that is being promoted through the Harare Institute of Technology.
International trade
One of the key drivers of growth in the promotion of international trade and this can be done through the harmonisation of trade rules. Reduction of customs tariffs and trade barriers as is the case with Sadc and Comesa is a welcome development to facilitate trade with neighbouring and other foreign countries.
Diaspora
Africans in the Diaspora should be encouraged to invest in export sectors and productive capacity back home, exploiting both their knowledge and interconnectivity.
Access to finance
Entrepreneurs in Zimbabwe just like their counterparts on the continent continue to face difficulties to get financial backing to realise their business ideas than in Europe. It is a fact that we do not have a credit culture in Africa and that is the reason why Foreign Direct Investment continues to come at a trickle. It is therefore critical that reforms are initiated in the banking sector in relation to the demands for collateral and bankruptcy laws and the financing instruments for SMEs.
We can only achieve results if we inculcate a spirit of competition among banks and do away with Government funding for the SME sector. This sounds strange but effectively what this means is that banks will find their competitive edge in giving venture capital to entrepreneurs.
Naturally, this would be more ideal for local-owned banks who are more familiar with the characteristics of local markets as opposed to the foreign-owned banks who in some instances are clueless in providing solutions for entrepreneurs.
It would make sense then that the ongoing call to indigenise the banking sector makes sense as some of the banks are mere subsidiaries without say in how the institutions are run.
Capital market integration on the continent should also be pursued to strengthen local ownership of resources. A thrust to improve macroeconomic management will help achieve sustainable economic growth, lower transaction costs, favourable interest rates and lower rates of inflation
Another avenue of promoting economic growth lies in micro-finance institutions that provide credit and savings for poor people who are unbankable and require the support of both the Government and the private sector. Naturally, they cannot operate in isolation as they will complement the banks and other non-financial services providers
Education and training
With the rising levels of unemployment continuing to dog developing countries including Zimbabwe, self-employment is now one of the avenues to eradicate poverty. It has to be understood that entrepreneurial thinking is not only necessary for those who want to be entrepreneurs, but everybody in a performing market society.
It is incumbent upon the authorities to ensure that the spirit of entrepreneurship is taught preferably from primary school and taken through the echelons of higher learning in response to the market demands.
Legal framework and governance
Any investor opening a business in Africa requires some form of security to guarantee the future of the business. There are certain bureaucracies that are inevitable before one settles and this inadvertently includes bribes that have to be eradicated at all costs.
Global studies carried out on the ease of doing business usual taints a bad image of African countries mainly driven by bureaucratic hurdles before one settles to do business.
In Sub-Saharan Africa it takes up to 61 days on average to open up a business. This process obviously has to be accelerated to provide entrepreneurs an immediate perspective.
Another contentious issue is the level of taxation. On average, African entrepreneurs have to pay up to 71 percent of their profits as tax and this ranks the highest in the world. There are increasing calls to reduce and simplify corporate taxes for small businesses, one of the ways that has been discovered as away to avoid tax evasion and compliance.
Adopting the appropriate codes for good corporate governance will help in upholding good public and economic governance.
As always, let’s make money.