SMEs formalisation gathers momentum Govt moves to ensure improved revenue collection
THE Government is making concerted efforts to formalise operations of Small to Medium Enterprises (SME) businesses in a bid to ensure improved revenue collection from those entities.
Small to Medium Enterprises and Co-operatives Development Minister Sithembiso Nyoni said the formalisation of SMEs was at an advanced stage.
The formalisation process of SMEs comes at a time when Zimbabwe’s tax base is shrinking as companies either downsize or close shop, with the SMEs sector taking over as the country’s biggest employer.
According to a Finscope Micro, Small and Medium Enterprises (SME) 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 more than 60 percent to the Gross Domestic Product.
“As a ministry we are dealing with the issue of formalisation and its importance because it helps people to really focus on growth. A lot of people have been asking how much are we contributing to the Zimbabwe Revenue Authority (Zimra).
“To that effect officials from Zimra, Ministry of Finance and Economic Development and my ministry are meeting, thereafter they will report back to Minister (Patrick) Chinamasa and myself,” said Minister Nyoni. In February, the Ministry of SMEs and Co-operatives Development held consultations with stakeholders in the sector to find effective ways to formalise the operations of SME businesses. The ministry’s interface with SME businesses was held at the launch of the Stakeholder Consultative Workshops and Interviews for the Formal is at ion Strategy and Co-operative Policy (2005) Review in Harare.
However, high administrative fees, labour laws and corruption continue to inhibit the formalisation of SMEs, with only 15 percent of them registered and licenced.
“We have held numerous workshops throughout the country where we have consulted SMEs and the sector’s stakeholders and through these meetings the SMEs cited the need for proper workplace, finance, access to markets, to be recognised and good tax regime,” said Minister Nyoni.
Meanwhile, Minister Nyoni said the opening of the country’s state-of-the-art India-Africa Incubation Centre to train entrepreneurs in various business areas was being delayed by the non-availability of machinery, which is in transit from India.
“We are still to commission the incubation centre because we are waiting for the installation of machinery by Indian engineers and technicians. We have long completed stage one of the project, which was renovations of the workshop and offices and we are waiting to complete stage two, which involves the installation of machinery and it will be done before the end of this year,” said Minister Nyoni.
The establishment of the centre is being made possible through a grant of $1 million, which would go towards the provision of equipment and technical expertise.
The incubation system is a concept in which entrepreneurs and potential entrepreneurs are trained in a business area of their interest on different periods of time ranging between three and 18 months depending on the complexity of each particular line of business. Upon successful completion of training, the graduates would be assisted with funding to enable them to procure their own machinery and venture
into business.