Govt compiles report on SMEs formalisation
THE Government is compiling a report and strategy on small and medium enterprises’ formalisation to tap into the informal sector.
Last year, the Government announced that it was formalising the SMEs sector following observations that about $5,7 billion was circulating in that market.
Of late, the Zimbabwe Revenue Authority (Zimra) has not been able to raise much through corporate tax as a number of companies in the formal sector have closed down due to the prevailing economic climate.
The informal sector has since been identified as a potential source of revenue for the fiscus as the economy was now skewed towards SMEs.
Responding to questions from the floor during the Parliamentary 2017 pre-national budget seminar in Bulawayo, Small and Medium Enterprises and Co-operative Development Minister Sithembiso Nyoni said: “We have started a process following a study that we did to consult the SMEs sector on formalisation so that they have a buy-in. A report and a strategy is being compiled, but let me just say that formalisation will not happen really without targeted support”.
The minister was asked why it was taking long to formalise SMEs.
“We need targeted support and resources to motivate SMEs to have a buy-in into formalisation. People will always honour if they see value in the services that are being provided,” said Minister Nyoni.
She said SMEs were crucial in economic development adding that presently, players in the sector being made to pay a dollar per day to local authorities for them to operate.
However, the minister said the monies being paid to local authorities were not going to the fiscus but into the urban councils’ coffers.
“The vendors on the streets are contributing to the local authorities a lot. Some of them have told us that they are thriving on the vendors with between 40 percent and 65 percent of their revenue coming from the SMEs.
“But now it is upon the Zimbabwe Revenue Authority to come up with its own product so that together we make sure that the SMEs pay to Zimra rather the dollar per day to local authorities,” she said.