Cabinet approves SMEs formalisation strategy
CABINET has approved the Small to Medium Enterprises formalisation strategy paving way for the reinforcement of the social contract and creation of sustainable decent jobs.
In 2015, the Government through the Ministry of Small to Medium Enterprises and Co-operative Development announced that it was formalising the SMEs sector following claims that about $5.7 billion was circulating in that market.
However, the formalisation process, which began last year, was met with resistance by players in the sector who claimed benefits of formalising were outweighed by costs.
This has prompted Government to champion initiatives meant to incentivise formalisation so as to upgrade small businesses into established entities.
In an interview yesterday, SMEs and Co-operative Development Minister Sithembiso Nyoni said: “We had a discussion in Cabinet where the SMEs formalisation strategy was approved last week. We are now working with the Ministry of Labour and Public Service to define decent jobs”.
The minister could not disclose further details of the formalisation strategy paper. Economic experts say moving from informality to formality in the SMEs sector can ensure an inclusive contribution to economic growth and development.
This process cannot be a single event, neither can it occur overnight, Minister Nyoni said, adding: “The formalisation process is an ongoing exercise hence we cannot say we have progressed this far”.
According to a Finscope Micro, Small and Medium Enterprises (SMEs) Survey (2012), in Zimbabwe there are 2,8 million SME owners employing 2,9 million people, translating into 5,7 million people dependent on the sector, contributing over 60 percent to the Gross Domestic Product.
As part of efforts to appreciate SMEs’ contribution to economic development, the Government among other support mechanisms is working to avail funding for the sector.
Over the years SMEs players have complained over tax charges, lack of working space, bureaucratic business registration process, difficulties when exporting among several costs of doing business hurdles.
Finance and Economic Development Minister Patrick Chinamasa has announced that the Government is working on unlocking a $3 million loan facility from the Arab Bank for Economic Development to recapitalise SMEs. In a related matter, at least 100 small to medium enterprise firms will this year benefit from a ZimTrade/ PUM Netherlands senior experts’ programme aimed at enhancing competitiveness and access to markets.
The SMEs will be drawn from different sectors such as food processing, tourism, horticulture producers as well as leather products.
The programme provides hands on advice to SMEs and related organisations that lack knowledge or cannot afford commercial consultants with an ultimate goal of improving productivity, competitiveness and access to markets in the Netherlands and the whole of Europe.
PUM Zimbabwe representative Dr Nigel Chanakira said the organisation currently has over 30 SME firms which have received expertise from the programme, while 11 more have already made their applications to be considered for it.
By end of this year, the figure should increase to 100 and Dr Chanakira said the programme was receiving tremendous support from SMEs with those already on it experiencing transformation.
Macro-Economic Planning and Investment Promotion Ministry Secretary Dr Judith Kateera said the PUM initiative complemented Government’s initiatives of driving export-oriented economic growth.
She added that the focus on SMEs was vital given the shift in the economic landscape where emerging firms are driving an inclusive economic growth. — @ okazunga