ZimTrade confident that SMEs can drive exports growth

SMALL to medium enterprises have the potential to drive export-led economic growth if given adequate support to improve their operational capacity, ZimTrade board chair, Mr Lance Jena, has said.

Zimbabwe is grappling with low exports and a high import bill with trade deficit for the period January to September 2017 at $1.45 billion. Mr Jena believes the trend could be reversed through enhanced export capacity building initiatives that would reduce the trade deficit to sustainable levels.

He said the ZimTrade Memorandum of Understanding (MoU) with the German Senior Expert Service (SES) signed last Thursday, would consolidate SMEs and mainstream industry operations and position the sector for exports. SES is a reputable international organisation that provides technical assistance to SMEs in developing countries on a voluntary basis.

“This intervention will assist to reposition our industry, especially SMEs, to become key drivers of export growth,” said Mr Jena.

According to the International Trade Centre, SMEs account for two thirds of formal non-agricultural employment in emerging markets and developing countries. However, their direct export business is a mere 7.6 percent of total sales while in Africa it is even lower at three percent. The recent Manufacturing Sector Survey conducted by the Confederation of Zimbabwe Industries (CZI) indicated that SMEs were facing more challenges as evidenced by the fact that most of them were operating below 37 percent of their capacity.

“We believe that this situation can be improved through knowledge transfer in areas such as factory floor layout, process design and materials handling, among others,” said Mr Jena.

He said capacity building and partnership programmes should be championed to develop linkages with export markets. As such, the Zimtrade board chair said the SES initiative was critical from both an import substitution and export growth perspective.

“The partnership will indeed, positively impact on the competitiveness of our products. This intervention is part of our on-going efforts to enhance productivity and export competitiveness of the manufacturing sector,” he said.

“Our export product mix needs to be diversified as value added exports are contributing, on average, less than 20 percent of total export proceeds. As a matter of economic principle, it is dangerous for our nation to depend on commodities as we are prone to global price fluctuations since we do not determine the price. We, therefore, need to grow the contribution of valueadded exports and we can only do so through such initiatives.

The expected outcomes from the SES intervention are, among others; cost effective production methods, improved product quality, adaptation of market systems and supply chains in line with international markets and increased volume and value of manufactured exports.

The MoU paves way for these experts to assist Zimbabwean companies, especially SMEs, who require technical assistance in the manufacturing sector. SES has implemented various successful projects throughout the continent, in countries such as South Africa, Botswana, Mozambique, Zambia, among others.

Through this partnership, SES experts will provide assistance to the manufacturing value chain, which include processes design, factory floor layout, production technologies, material-handling and product design, amongst others.