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Revelations contained in the Finscope 2012 Small and Medium Enterprises Survey report recently launched by President Mugabe clearly shows that there is immense potential in this economic sub sector.
The fact that the informal sector has created nearly six million jobs in the country and contributes US$7,4 billion to the economy stands out as striking statistics that cannot be easily brushed aside. It brings into perspective the misleading misconception that for long has been peddled that Zimbabwe has a very high unemployment percentage rate that ranges in the upper nineties.
The growth of the SME sector over the years has been driven by economic challenges that have seen several companies closing shop and thereby opening opportunities for enterprising Zimbabweans to venture into production in areas they previously never imagined they could enter.
And results have been forthcoming, albeit not at the same level as the departed ones, but the outputs have been encouraging.
Naturally there are challenges facing upstarts and in this illiquid economic environment, it has not been a smooth ride. For SMEs to engage in meaningful production, they need capital and with our banking institutions classifying them as “unbankable”, it has never been easy.
They are basically operating from hand to mouth and it would be asking too much from them to expect them to reciprocate by taking their money into the formal banking system that has refused to support them.
According to the Finscope study, the US$7,4 billion generated in this sector rarely finds its way into the formal banking system and we will not labour explaining why.
There are more interesting statistics from the study. In a country with a population of 13,5 million, a total of 5,7 million jobs were created, there are 2,8 million small business owners and 3,5 million businesses are in operation.
Interestingly, up to 66 percent of the 5,7 million jobs are found in rural areas while 34 percent are in urban areas.
There is no doubt that Zimbabwe is leveraging on its high literacy rates that is driving people to exploit their entrepreneurial skills, thereby providing a livelihood for their families.
We need to seriously consider the President’s call to tap into the immense potential of the SME sector and transform it effectively into a tool for economic growth.
The fact that the sector has the capacity to generate up to US$7,4 billion that is never banked is a serious misnomer that needs to be addressed. There are various ways of addressing this and this requires both parties to create an even playing field whereby the banking sector can lure the SMEs by offering lower interest rates and affordable banking charges.
They could easily mop up the liquidity in small businesses, which in turn will be used to increase cash flows that will ultimately spur economic growth in all sectors.
There is no doubt that a lot could be achieved if operations in the SMEs sector are formalised and the banks correspondingly offer products and services that attract these SMEs to bank with them.
They should be able to withdraw the money for both business and own use without any hindrance, thus creating the seemingly missing trust between the two parties.
Undoubtedly, such a relationship will translate in sustainable economic growth that will transform this country using our own resources, instead of banking on external forces that may never come after all.
The strongest message coming from the President to the SMEs sector is that they should formalise their business operations as up to 85 percent of their businesses were not registered and this was not a desirable state of affairs.
Government on its part could only move to help the SMEs sector if their operations are formalised and there was a starting point if they are integrated into the Government systems, including the Zimbabwe Revenue Authority formalities.
This is how it should be and there is a lot to gain from the public procurement facilities.
Online Reporter