SMEs key to economic recovery

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THE small-to-medium scale enterprises continue to make a substantial impact on Zimbabwe’s mainstream economy despite a myriad of challenges. Financial constraints, poor marketing and promotion have bedevilled the sector that has the potential to create thousands of jobs. Zimbabwe has much to learn from other economies like Nigeria and India where the micro small-to-medium enterprises (MSME) command a significant market share. A well articulated policy on the SMEs has the potential of creating employment opportunities in the country. The SMEs sector does not require a large capital base or infrastructure. SMEs are defined as firms with less than 250 employees. In Nigeria, SMEs account for 97 percent of all businesses, contributing 50 percent of employment. In India, the SMEs sector has remained an integral part in the country’s economy. India has a strong rural population that participates in the economy through the MSMEs. Like India, Zimbabwe has a strong rural population, and a carefully planned rural development programme would carry the day for the country’s economy that is on a recovery path. Zimbabwe has a large number of vocational colleges scattered around the country producing hundreds of graduands with the potential of becoming employers. Agricultural communities in Zvimba, Honde Valley, Seke, Domboshava, Mhondoro and Mutoko can add value to their fresh produce. Mutoko farmers produce tonnes of tomatoes for the Mbare vegetable market and the establishment of a food processing industry would add value to their produce and create more jobs for youths. In Honde Valley, horticulture is the people’s lifeline and such an industry would be beneficial to the populace through exportation of canned fruits. In India, a small industries service institute looks after the needs of existing and prospective entrepreneurs in the small-scale sector. Zimbabwe has the Small Enterprises Development Corporation (SEDCO) that has a similar task with the small industries institute. Harare’s Glen View high-density suburb has been dubbed as the home of SMEs in Zimbabwe. It has a booming business where upmarket household goods are manufactured. Hundreds of people have created employment for themselves after the closure of several industries. Today, carpenters, upholsterers, services and raw material suppliers form the core of the booming industry in Glen View. Economic analysts note that countries with a higher level of gross domestic product per capita have a larger SMEs sectors in terms of their contribution to total employment and GDP. Worldwide, MSMEs have been accepted as the engine of economic growth and hailed for promoting equitable development. Zimbabwe’s indigenisation programme is a positive development for the SMEs sector where funding of the marginalised groups — women, the disabled and youths — are some of the beneficiaries of the policy. Women, the disabled and youths can participate in the economy through funding under the National Indigenisation and Economic Empowerment Fund. Undercapitalisation, difficulties in accessing funds due to lack of collateral are affecting the SMEs both in Zimbabwe and Nigeria. Daniel Muzokomba, a carpenter in Glen View, said they were experiencing a new lease of life despite some drawbacks. “We are enjoying business as manufacturers of quality furniture, but we need access to loans so that we can increase our working capital,” he said. “We have so many orders for furniture, but undercapitalisation to purchase the much needed raw materials is pulling us back. “We also need machinery to improve efficiency.” Muzokomba said there was a vast market in the country, but they were unable to reach out to most corners of the country due to limited resources. Currently, there are more than 100 microfinance institutions operating in the country and recently, Government signed a US$5 million facility with the Arab Bank for Economic Development in Africa for the SMEs’ working capital. Under the industrial development policy, the Government intends to develop and strengthen existing parastatals like SEDCO to be able to offer more support to SMEs.

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